Abstract
Green products have been paid much attention in the domain of market players and environmental policy in recent years. In this study, we first build a Stackelberg game model to investigate the enterprises’ optimal production strategies considering consumers’ willingness to pay and enterprises’ total cost. Our results showed that there always exists one unique equilibrium based different consumers’ willingness to pay and enterprises’ cost. Moreover, the necessary condition for an enterprise to enter the market is that consumers’ willingness to pay is higher than production cost. We then explore the impact of the fluctuation of willingness to pay on enterprises’ production decision and discuss whether an enterprise is willing to use the environmental-friendly material to improve the green degree of product to deal with changes in consumers’ willingness to pay.
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