Green Packaging or Greenwashing? Implications of Bring-Your-Own-Container

Abstract

Greenwashing, which is defined as the intersection of a firm's poor environmental performance and positive communication about its environmental performance, is a common phenomenon in the green packaging market. Bring-your-own-container (BYOC), becomes a growing eco-trend among eco-conscious consumers, where consumers use their own reusable container instead of the disposable packaging offered by the firm to buy and consume products. In this paper, we develop a stylized model to examine the impacts of BYOC on a firm's packaging and communication decisions. We further study the profit and environmental implications if greenwashing is stopped (e.g., by credible third-party certifications or government regulations). Our main results follow. First, when some consumers start using their own reusable container, demand for the firm-offered green disposable packaging is expected to decrease, but a profit-maximizing firm might paradoxically spend more efforts creating a green image of its product packaging, either by adopting green packaging or even engaging in greenwashing. Second, it could be profitable for a firm to adopt an unverifiable self-label rather than a credible third-party certification to disclose the green quality of its product packaging, even if the latter is costless. Finally, it might not always be wise for the government to regulate greenwashing, since it could cause a negative impact on the environment given the BYOC trend.