This study examines the impact of a unified green badge policy on sales and seller competition in e-commerce platforms. The Climate Pledge Friendly badge on Amazon exemplifies the benefits of such a badge, including increased sales to eco-conscious consumers, improved product visibility, and enhanced brand trust and loyalty. Despite these advantages, there is limited research on how green badges affect seller competition. We address this gap using a three-stage game model. First, two sellers set their prices and product sustainability levels, considering the marketplace’s commission rate and badge threshold. Second, the marketplace sets the badge threshold and recommends products based on inferred consumer preferences. Third, consumers determine their purchases, and firms realize profits. The equilibrium is characterized by a symmetric pure-strategy perfect Bayesian equilibrium (PBE) under imperfect information. Our findings show that at equilibrium, product prices and demand increase with the probability of adopting the unified green badge, provided certain conditions are met. Market competition also intensifies with the proportion of badged products, especially when these products hold a market share greater than 50%. This research provides strategic insights for sellers on green certification, pricing, and product features, and offers guidance for e-commerce platforms on the benefits of unified eco-labeling practices, aiding in sustainable marketing strategies.
Research Article
Open Access