# Informing the uninformed, sensitizing the informed: The two sides of consumer environmental awareness

Dorothée Brécard, Mireille Chiroleu-Assouline

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Dorothée Brécard, Mireille Chiroleu-Assouline. Informing the uninformed, sensitizing the informed: The two sides of consumer environmental awareness. Journal of Environmental Economics and Management, 2025, 134, pp.103226. 10.1016/j.jeem.2025.103226. halshs-05376520

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# Informing the uninformed, sensitizing the informed: The two sides of consumer environmental awareness☆

Dorothée Brécard<sup>a, ●</sup>, Mireille Chiroleu-Assouline<sup>b, c,*</sup> ●

## ARTICLE INFO

**Keywords:**

Information campaign

NGO campaign

Environmental awareness

Environmental quality

Vertical product differentiation

## ABSTRACT

How do environmental information and awareness interact to improve environmental quality by changing consumer behavior and firm strategies? This article provides theoretical insights using an original differentiation model within a general framework whose specific cases have been studied previously. On the demand side, only informed consumers differentiate brown from green product quality, while uninformed consumers consider these perfect substitutes. Moreover, all informed consumers value the green product and devalue the brown product due to an aversion effect but are heterogeneous in their environmental awareness. On the supply side, two firms offer different environmental qualities and compete on price. We consider two types of environmental campaigns: increasing the number of informed consumers and increasing the environmental awareness of informed consumers. We show that these campaigns crucially determine three market configurations: segmented; fragmented, with a brown product that appeals to both uninformed consumers and a fraction of informed consumers; and covered. Assuming that the greenest consumer behavior is abstention, we find that a situation where all consumers are informed and some are highly environmentally aware is not necessarily the greenest. Depending on the aversion effect, the campaign organizer's budget, and their relative cost-effectiveness, information and awareness-raising campaigns require a judicious mix.

## 1. Introduction

How can consumers become aware of the environmental characteristics of products when they have little or no information about the environmental impact of their consumption? Most consumers are unfamiliar with the environmental impacts of food products and therefore are unable to identify environmentally friendly food products (Hartmann et al., 2021). Many are also unfamiliar with ecolabels, which are designed to inform them about the environmental performance of products in different areas. In Europe, for example, only 38 % of consumers report having seen or heard of the European Union Ecolabel, 41 % incorrectly believe it is awarded to organic food and beverage products, and 33 % claim not to know whether they have bought products with an ecolabel or not. In contrast, 73 % consider the environmental impact of a product important when making a purchase decision (European Commission, 2023). This study aims to gain theoretical insights into the role of consumers' knowledge and awareness of the environmental harmfulness of

<footnote><sup>a</sup> Université de Toulon, LEAD, Toulon, France</footnote>

<footnote><sup>b</sup> Paris School of Economics, University Paris 1 Panthéon-Sorbonne, Paris, France</footnote>

<footnote><sup>c</sup> Institut universitaire de France, Paris, France</footnote>

<footnote>* This research has been funded by a French government subsidy managed by the French National Research Agency under the framework of the "Investissements d'avenir" programme reference ANR-17-EURE-001 and by an ANR grant (ANR-24-CE26-7833-01).</footnote>

<footnote>† Corresponding author at: Paris School of Economics, University Paris 1 Panthéon-Sorbonne, Paris, France.</footnote>

<footnote>Email addresses: dorothee.brecard@univ-tln.fr (D. Brécard), m.chiroleu-assouline@psemail.eu (M. Chiroleu-Assouline).</footnote>
products in their consumption choices between green and brown products and the resultant implications for firms' strategies, market
equilibrium, and environment.

The extensive socio-psychological and marketing literature<fnref n="1" /> on pro-environmental behavior, such as the purchase of environmen-
tally friendly products, indicates that such behavior is favored by consumers with environmental knowledge and awareness. The
starting point of this literature is the observation of a gap between environmental attitudes and behavior (Stern, 2000; Vermeir and
Verbeke, 2006). Although measures for environmental concern are becoming more sophisticated with multiple underlying constructs
(Dunlap, 2016), their relationship to sustainable consumption behavior remains complex (Saari et al., 2021). Product characteristics,
such as price, quality, and convenience, and socio-economic characteristics of consumers, such as age, education, and income, help
explain why environmental concern does not always translate into pro-environmental behavior (Diamantopoulos et al., 2003; Joshi
and Rahman, 2015; Meyer, 2015). Environmental values and knowledge are significant factors in the relationship between environ-
mental attitudes toward purchasing green products and actual green purchasing behavior. Vermeir and Verbeke (2006, 2008) show
that young Belgians' information and knowledge about environmental issues related to food products support the transformation
of positive attitudes toward sustainable products into behavioral intentions to purchase such products, along with personal values
and social norms, perceived consumer effectiveness in solving environmental problems, and perceived availability of green products.
Using a large European survey dataset, Golob and Kronegger (2019) and Saari et al. (2021) also show the essential role of environ-
mental knowledge and awareness. Golob and Kronegger (2019) demonstrate that Europeans' pro-environmental behavior is strongly
influenced by their sense of personal responsibility and willingness to pay (WTP) for environmentally friendly products, which in turn
are strongly influenced by the perceived importance of environmental issues and only weakly influenced by their level of information
about environmental issues (which is also weakly influenced by the perceived importance of environmental issues). Saari et al. (2021)
prove that Europeans' environmental risk perception and environmental knowledge are contingent on their environmental concerns
and that all three factors promote sustainable consumption behavior. Consumers' environmental knowledge and awareness are even
more critical when purchasing ecolabeled products, as such pro-environmental behavior also requires consumer understanding and
trust in ecolabels (Taufique et al., 2014). Grunert et al. (2014) show that Europeans' use of information on four sustainable labels
is tied to both high environmental concern and a good understanding of the concept of sustainability and sustainable labels, which
in turn depend on socio-economic characteristics and personal values. More recently, Vázquez et al. (2023) show that, when faced
with 28 sustainability labels on various common household products, nearly half of Spanish consumers have difficulty recognizing
the labels, have neutral or negative attitudes toward them, and therefore are unlikely to purchase labeled products. As a result, to
avoid buying environmentally harmful products, consumers must have objective information about their harmfulness and also be
sufficiently aware of the environmental issues they raise. In this research, we model objective information and subjective awareness-
raising as two different tools for increasing consumers' environmental consciousness to investigate their complementary nature, their
effects on consumer behavior and firm strategies, and components of welfare, including environmental quality.

Advertising literature makes a clear distinction between information and awareness. Bagwell (2007) distinguishes between infor-
mative advertising, which aims to educate consumers, and persuasive advertising, which aims to change consumers' tastes. While the
purpose of persuasive advertising is usually to “*create spurious product differentiation and brand loyalty*” (Bagwell, 2007), which would
reflect “greenwashing” when applied to the environmental characteristics of products (Delmas and Burbano, 2011; Lyon and Maxwell,
2011; Lyon and Montgomery, 2015), environmental non-governmental organizations (NGOs) can also use such advertising to raise
consumer awareness of environmental issues (Heijnen and Schoonbeek, 2008; Van der Made and Schoonbeek, 2009). Because envi-
ronmental characteristics of products are credence attributes, informative advertising also helps signal them to consumers (Feddersen
and Gilligan, 2001; Heijnen, 2013). Thus, the informational and persuasive effects of environmental campaigns are difficult to dis-
tinguish because consumers' environmental information and environmental preferences are so closely linked. However, according
to Glaeser (2014), when environmental campaigns aim only to provide information, “*given the modest levels of altruism [observed]
elsewhere in human life, these campaigns would [likely] have only a modest impact on behavior*,” while when they aim to alter preferences
by increasing altruism, “*they would also probably do little good.*” In other words, environmental information and awareness-raising
campaigns should be complementary and their effectiveness in greening consumption mutually reinforcing.

These two modes of action on consumer behavior have so far been considered separately in the literature. By demonstrating the
role of an activist's information about the quality of credence goods in enabling the best quality to be marketed, Feddersen and
Gilligan (2001) paved the way for a first series of works examining the effect of information about the quality of the products offered
on the market. In a dynamic setting in which uninformed consumers coexist with an increasing proportion of identical consumers
informed about the respective health damage caused by products differentiated by their level of environmental quality, Sartzetakis
et al. (2012) show that information provision can green the market and improve welfare up to a steady state. Counterintuitively, when
consumers are heterogeneous in their WTP for the environmental quality of products offered by a duopoly, consumer information is not
systematically beneficial to overall environmental quality and social welfare, though it does promote differentiation and the creation
of a market for green products. Heijnen (2013) finds, for example, that the threat of informative advertising by an environmental
group only about the most harmful product in a set increases firm profit and consumer surplus, but with ambiguous welfare effects.
In a similar setting, but with information acquisition costly for consumers, Heyes et al. (2020) show that constraining information
availability can sometimes benefit market outcomes but also damage the environmental outcome. Brécard and Chiroleu-Assouline
(2025) find that increasing the proportion of informed heterogeneous consumers who value a green product and devalue a brown

<footnote n="1">¹ Despite the rich literature on this subject, we cite only a few articles, focusing on literature reviews and empirical studies using European survey data, especially variables related to consumers' environmental knowledge.</footnote>
product as a result of an aversion effect does not always lead to environmental improvement, nor does the introduction of a product of intermediate environmental quality guarantee it. Buehler and Schuett (2014) consider experience, rather than credence, goods differentiated by quality level, for which consumers have heterogeneous WTP. They assume that only a fixed proportion of consumers are informed about product quality and show that firms are willing to meet high-quality standards only when the informed fraction is small.

The equally ambiguous effects of persuasive advertising, which aims to shape the preferences of consumers who are assumed to be fully informed, are the subject of another strand of literature. For example, Heijnen and Schoonbeek (2008) show that the threat of an environmental group launching a campaign to increase consumers' environmental awareness and WTP for the environmental quality of a product leads a monopolist to adopt cleaner production techniques, but only enough to deter activists from taking action. Van der Made and Schoonbeek (2009) consider a campaign that increases awareness of the difference in environmental quality between two products. While the campaign helped a greener company enter the market and attract consumers to the greener product, it did not improve the environmental quality of the market. García-Gallego and Georgantzís (2010) show that in a covered duopoly market, increasing consumer heterogeneity in terms of WTP for greener products benefits firms, but private interests and the environment are only aligned when consumers are initially highly heterogeneous. This reflects a special case of the model García-Gallego and Georgantzís (2009) developed, which starts from a monopoly market and then transforms into a duopoly by the entry of a more environmentally friendly competitor, due to the increased average environmental sensitivity of consumers. In this case, reducing or maintaining heterogeneity improves both environmental and social welfare, but increasing heterogeneity is welfare reducing.

Using an encompassing differentiation model, we investigate the respective roles of environmental information and awareness in diverting consumers from a brown product and thereby improving environmental quality. Our model incorporates the classic vertical differentiation model in which, on the supply side, two firms offering a product differentiated by its environmental quality compete on price. On the demand side, in line with Brécard and Chiroleu-Assouline (2025), we distinguish between informed and uninformed consumers and assume that only informed consumers are more or less environmentally aware. More specifically, we assume that only informed consumers differentiate between the brown and green quality of the product while uninformed consumers view them as perfect substitutes. Moreover, all informed consumers value the green product and devalue the brown product as a result of an aversion effect but are heterogeneous in their environmental awareness. Our model is unique in that it considers two types of environmental campaigns: one that increases the number of informed consumers and one that increases the environmental awareness of informed consumers. Most importantly, rather than considering them in silos, we study the optimal combination of these two levers of influence on consumer purchasing behavior by a pro-environmental organization. We examine how these campaigns affect environmental quality, assuming that the greenest consumer behavior is abstention.

With this original framework, we provide four new insights into the interaction between environmental information and awareness to guide consumers toward greener consumption behaviors. First, information and awareness-raising campaigns crucially determine the market configuration: it is either segmented between the segment of uninformed consumers who buy the brown product and the segment of informed consumers who buy the green product or nothing; or fragmented with a brown product that appeals to both uninformed consumers and a fraction of informed consumers and the green product which is purchased by the most informed and environmentally aware consumers; or covered, with all consumers buying either the brown or the green product. Second, in some market configurations, the campaigns have opposite effects on consumption of the brown product: one dissuades consumers from the brown product, while the other makes the brown product more attractive. Third, both campaigns do not always work in favor of higher environmental quality, so a situation in which all consumers are informed and highly environmentally aware is not necessarily the greenest situation. Thus, depending on the aversion effect, the relative cost-effectiveness of the campaigns, and the budget of the environmental NGO, information and awareness-raising campaigns must be carefully combined to achieve the highest possible environmental quality. Fourth, from a welfare perspective, while NGO campaigns consistently increase consumer surplus, they tend to reduce total industry profits due to the drop in profit from the brown product. They only lead to improvements in economic welfare when the NGO has a sufficiently large budget to inform all consumers and substantially increase their environmental awareness. This highlights a potential misalignment between environmental objectives and economic welfare when the NGO's budget is limited.

The remainder of the paper proceeds as follows. Section 2 presents the model. Section 3 analyzes the Nash equilibrium in different situations of market configurations. Section 4 details how the share of informed consumers and the level of their environmental awareness affect their behavior and firm strategies. Section 5 reports on the optimal information and awareness-raising campaigns for environmental quality. Section 6 examines welfare implications of information and awareness-raising campaigns. Section 7 contextualizes the existing literature within the framework of our model, and Section 8 concludes.

## 2. The model

We propose a game consisting of three stages. In the first stage, two firms offer two environmental qualities of a good: a “brown” product with a harmful effect on environmental quality and a “green” product with a reduced or even zero effect on environmental quality. Such vertical differentiation allows firms to avoid price wars and earn profits. Only a small fraction of consumers are informed about the different environmental impacts of the two products; however, they are heterogeneous in their environmental awareness. The remaining consumers are uninformed and therefore unaware of the environmental qualities, so they consider the two products perfectly substitutable. In the second stage, an environmental NGO issues both an information campaign, which increases the fraction of informed consumers, and an awareness-raising campaign, which increases the environmental consciousness of these consumers. In
the third stage, firms compete on price, and consumers decide to buy one unit of the brown product, one unit of the green product, or neither. The game thus involves consumers and three players: the two firms and the campaign organizer.

## 2.1. Consumers

The first central assumption of the model is that only a fraction $\alpha(x)$ of consumers are informed about the different harmfulness of products $i$, while $1 - \alpha(x)$ of consumers are uninformed about the environmental impact of their consumption; an information campaign can increase the fraction of informed consumers through an information disclosure effort $x \ge 0$, with $\alpha(0) > 0$, $\alpha'(x) > 0$, $\alpha''(x) < 0$, and $\alpha(x) \in [0, 1]$ (see Section 2.3). The uninformed consumers do not care about the environmental quality of the product, while the informed consumers care more or less about it. Not consuming provides zero utility. Environmental quality is defined relative to the initial belief as $e_i$, with $e_B < 0$ and $e_G > 0$.

Thus, informed consumers devalue the brown product, as a result of an aversion effect, and value the green product. These informed consumers are characterized as in the standard vertical differentiation model of Mussa and Rosen (1978) who define WTP for environmental quality as $\theta e_i$, where $\theta$ is initially assumed to be uniformly distributed over $[0, \bar{\theta}]$, with a distribution density of $1/\bar{\theta}$. The assumption that the lowest WTP for environmental quality is zero provides continuity between uninformed and informed consumers. Furthermore, all consumers, informed or not, buy one unit or none of the good.

The second central assumption of the model is that an awareness-raising campaign can further increase informed consumers' WTP for environmental quality. Their WTP is then defined by the increasing function $\Theta(a)$, where $a \ge 0$ is the awareness effort of the environmental NGO (see Section 2.3). The campaign is therefore a form of persuasive advertising (Bagwell, 2007; Van der Made and Schoonbeek, 2009). For the sake of simplicity, we assume that $\Theta(a) = \theta \gamma(a)$, where $\gamma(0) = 1$, $\gamma'(a) > 0$, $\gamma''(a) \le 0$, and $\gamma(a) \in [1, \bar{\gamma}]$. The awareness-raising campaign leads to a non-uniform increase in WTP: the more sensitive consumers are to the environmental characteristics of a product, the more responsive they are to the awareness-raising campaign. We extend the range of consumers' WTP for environmental quality to $[0, \bar{\theta}\gamma(a)]^2$, so that the density of the distribution of consumers' WTP, equal to $1/(\bar{\theta}\gamma(a))$, decreases with $a$. This assumption is consistent with the findings that, among informed consumers, there are always some who are completely indifferent to the environmental qualities of products, as documented in empirical literature, particularly among consumers with low incomes or in developing countries (Onwezen and van der Weele, 2016; Edenbrandt et al., 2021; Palacios-González and Chamorro-Mera, 2020), and in behavioral economics (Marette et al., 2012).

Therefore, consumer preferences are represented by the following utility functions<fnref n="3" />:

$$u_i(\theta) = \begin{cases} r - p_i & \text{for uninformed consumers} \\ r + \theta \gamma(a) e_i - p_i & \text{for informed consumers} \end{cases} \quad i = B, G \quad (1)$$

where $p_i$ is the price of the product $i$, and $r$ is the gross WTP for the good, which includes the WTP for the “neutral” environmental quality. Not consuming provides zero utility. All uninformed consumers buy the same product $i$ providing the highest utility (i.e., the cheapest). The segment of informed consumers can be uncovered or fully covered. We denote $\Theta_i \equiv -(r - p_i)/e_i > 0$ as the marginal WTP of the informed consumer indifferent between product $i$ at price $p_i$ and no consumption and $\Theta_{BG} \equiv (p_G - p_B)/(e_G - e_B)$ as the marginal WTP of the informed consumer indifferent between the brown product at price $p_B$ and the green product at price $p_G$.<fnref n="4" /> In the case of an uncovered segment, informed consumers' demand for the brown product is $\alpha(x)\Theta_B/(\bar{\theta}\gamma(a))$ if $\Theta_B > 0$ and 0 otherwise, and their demand for the green product is $\alpha(x)(\bar{\theta}\gamma(a) - \Theta_G)/(\bar{\theta}\gamma(a))$; consumers with marginal WTP $\bar{\theta}\gamma(a)$ between $\Theta_B$ and $\Theta_G$ abstain. In the case of a covered market, informed consumers' demand for the brown product is $\alpha(x)\Theta_{BG}/(\bar{\theta}\gamma(a))$, and their demand for the green product is $\alpha(x)(\bar{\theta}\gamma(a) - \Theta_{BG})/(\bar{\theta}\gamma(a))$.

## 2.2. Firms

In the first stage of the game, the firms decide which environmental quality to supply. The levels of the environmental quality $q_B$ and $q_G$ are exogenous; they depend on a technically achievable or legally required minimum quality for $q_B$ and on an eco-label that is well known by informed consumers for $q_G$. Because quality is costly, a firm chooses either the worst quality, $q_B$ (which leads to a relative quality $e_B$), or the minimum quality, $q_G$ (which leads to a relative quality $e_G$), required to add the ecolabel to its product.

In the third stage of the game, after the information and the awareness-raising campaigns in the second stage, the firms compete on price. They earn profits $\pi_i = (p_i - c_i)d_i$, where $c_i$ are unit costs and $d_i$ is consumer demand, with $i = B, G$. We assume that the firm that produces the brown product $B$ bears zero cost (i.e., $c_B = 0$), while the production of the green product incurs positive costs (i.e., $c_G \equiv c > 0$). We restrict our analysis to the case in which the unit production cost of the green product is too high for uninformed consumers to buy it at its competitive price but low enough for the most environmentally conscious consumer to buy it before the awareness-raising campaign:

<footnote n="2">² This assumption corresponds to that of “heterogeneity-enhancing” in García-Gallego and Georgantzís (2009). This differs from Van der Made and Schoonbeek (2009), who assume that the interval $[0, \bar{\theta}]$ is uniformly shifted upwards, with the WTP of all consumers within the interval increasing by the same amount.</footnote>

<footnote n="3">³ To present our results as clearly as possible, we use $\theta \gamma(a)$ instead of $\Theta(a)$ in the equations.</footnote>

<footnote n="4">⁴ The parameters $\Theta_i$ and $\Theta_{BG}$ correspond to the marginal WTP for environmental quality of the indifferent consumers after the awareness-raising campaign, that is, $\theta \gamma(a)$.</footnote>
**Assumption 1.** $r < c < r + \bar{\theta}e_G$

To allow different market configurations to emerge, we also assume that the unit cost satisfies Assumption 2 (see Sections 3.2 and 3.3).<fnref n="5" />

**Assumption 2.** $c < \frac{r(e_G - e_B)}{-e_B}$

### 2.3. Environmental NGO

Information and awareness-raising campaigns are carried out by an environmental NGO to improve environmental quality, defined as

$$E = e_B d_B + e_G d_G + \bar{e}(1 - d_B - d_G). \qquad (2)$$

A key assumption is that abstention is better for the environment than consumption. This means that consumers who abstain from purchasing brown and green products (representing the share $1 - d_B - d_G$ of total demand) make the best contribution to environmental quality, so we set their environmental increment to such quality to $\bar{e} \ge e_G > 0 > e_B$. Although reducing consumption of the brown product helps improve environmental quality, increasing consumption of the green product does not necessarily improve environmental quality unless it comes at the expense of the brown product.

The environmental campaigns are costly. We assume positive unit costs $w_x$ and $w_a$ for the information and awareness-raising campaigns. The objective of the environmental NGO is therefore to maximize $E$ under its budget constraint $w_x x + w_a a \le R$, where $R$ is its campaign budget.<fnref n="6" />

In addition, environmental quality contributes to social welfare, defined as the sum of consumer surplus, firm profits, and the social benefit of environmental quality:

$$W = (1 - \alpha(x))CS_U + \alpha(x)CS_I + \pi_B + \pi_G + \delta E, \qquad (3)$$

where $CS_U$ and $CS_I$ are the surpluses of uninformed and informed consumers such that

$$CS_U = r - p_i \text{ with } i = B, G. \qquad (4)$$

$$CS_I = \begin{cases} \int_{\Theta_G}^{\bar{\theta}_\gamma(a)} (r + ze_G - p_G) dz & \text{if } \Theta_B < 0 < \Theta_G < \bar{\theta}_\gamma(a) \\ \int_{0}^{\Theta_B} (r + ze_B - p_B) dz + \int_{\Theta_G}^{\bar{\theta}_\gamma(a)} (r + ze_G - p_G) dz & \text{if } 0 < \Theta_B \le \Theta_G < \bar{\theta}_\gamma(a) \\ \int_{0}^{\Theta_{BG}} (r + ze_B - p_B) dz + \int_{\Theta_{BG}}^{\bar{\theta}_\gamma(a)} (r + ze_G - p_G) dz & \text{if } \Theta_G \le \Theta_{BG} \le \Theta_B < \bar{\theta}_\gamma(a), \end{cases} \qquad (5)$$

and $\delta$ is the usual marginal environmental benefit, or the monetary valuation of a marginal improvement in environmental quality $E$.

Our definition of welfare is based on consumers' preferences after information and awareness campaigns. There are two reasons that support this assumption. First, the information campaign reduces asymmetric information about the environmental harmfulness of the brown product, bringing perceived surplus closer to actual surplus. Second, the awareness campaign is prosocial and normatively desirable because the NGO's goal is to raise environmental awareness and encourage greener consumption choices, as opposed to persuasive, profit-driven advertising. This approach aligns with normative welfare analysis, which incorporates dynamic, socially informed preferences, especially when public goods or ethical considerations are involved (Inderst and Thomas, 2022). This approach contrasts with traditional welfare economics, which assumes that preferences are stable and exogenous (Stigler and Becker, 1977) and considers that persuasive advertising aims to manipulate preferences (Harsanyi, 1953; Pollak, 1978). This justifies considering the preferences prior to the campaigns as consumer surplus. However, in our model, the campaigns allow for the internalization of environmental externalities by providing information and raising consumer awareness. Therefore, we consider the preferences after the campaigns to reflect the actual surplus of better-informed, environmentally conscious consumers.

## 3. Nash equilibrium

Depending on the fraction of informed consumers, $\alpha(x)$, and the level of environmental awareness, $\bar{\theta}_\gamma(a)$, three different market configurations can emerge in the Nash equilibrium (see Appendix A): segmentation, in which the green and the brown markets are completely independent, with the brown market serving only the uninformed consumers and the green market serving some of the informed consumers; fragmentation, in which the brown market serves all the uninformed consumers and some informed consumers; and full coverage, in which all consumers are served. Fig. 1 illustrates the market configurations, with $e_B = -0.5$, $e_G = 1$, $r = 3$, and $c = 4$.<fnref n="7" />

<footnote n="5">⁵ Note that $r + \bar{\theta}e_G > \frac{r(e_G - e_B)}{-e_B}$ if $r + \bar{\theta}e_B < 0$</footnote>

<footnote n="6">⁶ Note that maximizing $E$ under a budget constraint is equivalent to maximizing $E - \lambda(w_x x + w_a a)$, where $\lambda$ is the opportunity cost of the money spent on the campaign. We thank an anonymous reviewer for this suggested alternative assumption. We adopt the first assumption to highlight the role of the campaign budget in the NGO's optimal decision-making process.</footnote>

<footnote n="7">⁷ We chose these parameters to represent all market configurations in Fig. 1.</footnote>
<figure><img src="image_4.png" /><figcaption>Fig. 1. Market configurations.</figcaption></figure>

<figure><img src="image_5.png" /><figcaption>Fig. 2. Demand of informed consumers in a fragmented market.</figcaption></figure>

### 3.1. Segmentation

The market is segmented when the informed and uninformed consumers act in two independent markets (i.e., $\Theta_B \le 0 < \Theta_G < \bar{\theta}\gamma(a)$): the brown market, in which all uninformed consumers consume the brown product, and the green market, in which informed consumers are either those with the highest WTP for environmental quality, who consume the green product, or those with the lowest WTP for environmental quality, who consume neither. Segmentation occurs when the fraction of informed consumers is lower than a given threshold, denoted by $\hat{a}_0(a)$, which is derived from the fragmentation conditions in Section 3.2 and defined as

$$ \hat{a}_0(a) = \frac{-\bar{\theta}\gamma(a)e_B}{r - \bar{\theta}\gamma(a)e_B}, \qquad (6) $$

where $\hat{a}_0(a)$ is an increasing and concave function of $a$. Furthermore, the higher the maximum WTP $\bar{\theta}$ and the lower the gross utility $r$ and the brown quality $e_B$, the higher is $\hat{a}_0(a)$. Regardless of the awareness-raising campaign effort, we have $0 \le \hat{a}_0(a) < 1$, which means that other market configurations may emerge for $\alpha(x) > \hat{a}_0(a)$.

The firms then behave like two monopolies in their market segments. The firm supplying the brown product (hereinafter called Firm B) sets a price $p_B^m$ equal to the maximum WTP for the brown product of uninformed consumers, $p_B^m = r$. The demand for the brown product is $d_B^m = 1 - \alpha(x)$ and the profit of Firm B is $\pi_B^m = (1 - \alpha(x))r$.

The firm that supplies the green product (hereinafter called Firm G) sells its product to informed consumers whose WTP for the green product $\theta\gamma(a)$ is greater than $\Theta_G$. Therefore, Firm G maximizes its monopoly profit $\pi_G = (p_G - c)\alpha(x)\frac{\bar{\theta}\gamma(a)e_G - r + p_G}{\bar{\theta}\gamma(a)e_G}$ by setting a price $p_G^m$ defined as<fnref n="8" />

$$ p_G^m = \frac{c + r + \bar{\theta}\gamma(a)e_G}{2}, \qquad (7) $$

where $p_G^m > r$ under Assumption 1. The demand from informed consumers is

$$ d_G^m = \alpha(x) \frac{r - c + \bar{\theta}\gamma(a)e_G}{2\bar{\theta}\gamma(a)e_G}. \qquad (8) $$

The demand for the green product is positive under Assumption 1. The profit of Firm G is then equal to $\pi_G^m = \bar{\theta}\gamma(a)e_G d_G^m / \alpha(x)$.

### 3.2. Fragmentation

When the fraction of informed consumers is higher than $\hat{a}_0(a)$, the smaller segment of uninformed consumers still consumes the brown product, while the larger segment of informed consumers is fragmented (i.e., $0 < \Theta_B < \Theta_G < \bar{\theta}\gamma(a)$ as in Fig. 2 where the arrows show how $\Theta_B$ and $\Theta_{BG}$ move when $\alpha(x)$ rises): the informed consumers with the highest WTP for environmental quality

<footnote n="8">⁸ To simplify the notation, we omit the variables $x$ and $a$ in the price, demand, and profit functions.</footnote>
consume the green product, those with the lowest WTP consume the brown product, and those with intermediate WTP consume neither.

In this case, Firm G still acts as a monopolist, setting price $p_G^m$, facing demand $a_G^m$, and earning profit $\pi_G^m$. Compared to the segmentation case, Firm B is interested in lowering its price to attract the (larger fraction of) informed consumers with a WTP for environmental quality $\theta\gamma(a)$ lower than $\Theta_B$. We can then define the demand for the brown product as $d_B = 1 - \alpha(x) + \alpha(x)(p_B - r)/(\bar{\theta}\gamma(a)e_B)$. Maximizing its monopoly profit $\pi_B = p_B d_B$ leads Firm B to set a price $p_B^f$ defined as

$$p_B^f = \frac{\alpha(x)r - (1 - \alpha(x))\bar{\theta}\gamma(a)e_B}{2\alpha(x)}, \qquad (9)$$

where $p_B^f < r$ when $\alpha(x) > \hat{\alpha}_0(a)$. The demand is then

$$d_B^f = \frac{1}{2} \left( 1 - \alpha(x) - \frac{\alpha(x) r}{\bar{\theta} \gamma(a) e_B} \right), \qquad (10)$$

and the profit is $\pi_B^f = -\bar{\theta}\gamma(a)e_B d_B^f^2/\alpha(x)$.

Market fragmentation occurs when $0 < \Theta_B < \Theta_G < \bar{\theta}\gamma(a)$. The inequality $\Theta_B < \Theta_G$, which can be rewritten as $(r - p_B^f)/e_B < (p_G^m - r)/e_G$, requires that the fraction of informed consumers is lower than $\hat{\alpha}_1(a)$, defined as

$$\hat{\alpha}_1(a) = \frac{-\bar{\theta}\gamma(a)e_B e_G}{r e_G + (c - r)e_B}. \qquad (11)$$

Assumption 2 ensures that $\hat{\alpha}_1(a)$ is positive, increasing, and concave in $a$, but also that $\hat{\alpha}_1(a) > \hat{\alpha}_0(a)$. In addition, $\hat{\alpha}_1(a)$ increases with $\bar{\theta}$ and $c$ and decreases with $e_B$, $e_G$, and $r$. Moreover, $\hat{\alpha}_1(a) < 1$ if the awareness effort $a$ remains below a threshold implicitly defined by the following inequality:

$$\gamma(a) < \frac{r(e_G - e_B) + c e_B}{-\bar{\theta} e_B e_G} \equiv \hat{\gamma}_1. \qquad (12)$$

Logically, the higher the value of $\bar{\theta}$, the lower the maximum threshold $\hat{\gamma}_1$ will be, as the awareness-raising campaign must be more restrained because consumers were already sensitive to environmental quality before the campaign. The aversion effect ($-e_B$) has a negative impact on $\hat{\gamma}_1$, meaning that the lower $e_B$ is, the lower $\hat{\gamma}_1$ is and the higher $\hat{\alpha}_1(a)$ is.<fnref n="9" /> Thus, the aversion effect tends to “enlarge” the fragmented market by increasing the number of informed consumers and their maximum environmental awareness compatible with a fragmented market.

### 3.3. Full coverage

When the fraction of informed consumers is greater than $\hat{\alpha}_1(a)$, the market is fully covered. Uninformed consumers still consume the brown product, while informed consumers consume either the brown or the green product (i.e., $0 < \Theta_G \le \Theta_{BG} \le \Theta_G < \bar{\theta}\gamma(a)$). In the segment of informed consumers, we consider two sub-cases (see also Wauthy, 1996; Liao, 2008): Either the market is covered with an interior solution because $\Theta_G < \Theta_{BG} < \Theta_B$, or the market is covered with a corner solution and $\Theta_G = \Theta_{BG} = \Theta_B$.

When the market is covered with an interior solution, Firms B and G maximize their profits

$$\pi_B = p_B \left( 1 - \alpha(x) + \alpha(x) \frac{p_G - p_B}{\bar{\theta}\gamma(a)(e_G - e_B)} \right), \\ \pi_G = (p_G - c)\alpha(x) \frac{\bar{\theta}\gamma(a)(e_G - e_B) - p_G + p_B}{\bar{\theta}\gamma(a)(e_G - e_B)}.$$

The resulting equilibrium prices are

$$p_B^c = \frac{c}{3} + \frac{(2 - \alpha(x))\bar{\theta}\gamma(a)(e_G - e_B)}{3\alpha(x)}, \qquad (13)$$

$$p_G^c = \frac{2c}{3} + \frac{(1 + \alpha(x))\bar{\theta}\gamma(a)(e_G - e_B)}{3\alpha(x)}. \qquad (14)$$

We can then define the demand for the brown product as

$$d_B^c = \frac{1}{3} \left( 2 - \alpha(x) + \frac{\alpha(x) c}{\bar{\theta} \gamma(a) (e_G - e_B)} \right), \qquad (15)$$

and the demand for the green product as $d_G^c = 1 - d_B^c$.

<footnote n="9">⁹ We have $\partial\hat{\gamma}_1/\partial e_B = r/(\bar{\theta}e_B^2) > 0$ and $\partial\hat{\alpha}_1(a)/\partial e_B = -(r\bar{\theta}\gamma(a)e_G^2)/(r(e_G - e_B) + ce_B)^2 < 0$.</footnote>
The condition for the market to be covered with an interior solution is that all consumers who prefer the green to the brown product are willing to pay price $p_G^c$ (i.e., $\theta\gamma(a) \ge \Theta_{BG} > \Theta_G$) and all consumers who prefer the brown to the green product are willing to pay price $p_B^c$ (i.e., $\theta\gamma(a) < \Theta_{BG} < \Theta_B$). We show in Appendix A that $\Theta_G < \Theta_B$ requires a sufficiently large segment of informed consumers, such that $\alpha(x) \ge \hat{\alpha}_2(a)$, defined as

$$ \hat{\alpha}_2(a) = \frac{\bar{\theta}\gamma(a)(e_G - e_B)(2e_G - e_B)}{\bar{\theta}\gamma(a)(e_G - e_B)(e_G + e_B) + 3r(e_G - e_B) - c(e_G - 2e_B)} \quad (16) $$

A sufficient condition for $\hat{\alpha}_2(a)$ to be positive and increasing in $a$ is $c < 3r(e_G - e_B)/(e_G - 2e_B)$. Such a condition is less restrictive than Assumption 2 when the aversion effect is high ($e_B < -e_G$) but more restrictive otherwise.<fnref n="10" /> In addition, because $\hat{\alpha}_2(a)$ increases with $\bar{\theta}$ and $c$, a covered market with an interior solution is less likely to occur if the informed consumers are already aware of the environmental quality before the awareness-raising campaign and the production cost of the green product is high. Conversely, $\hat{\alpha}_2(a)$ decreases with $e_B$ and $r$, while it can increase or decrease with $e_G$, depending on specific conditions on other parameters. Moreover, $\hat{\alpha}_2(a) < 1$ requires the awareness effort $a$ to be constrained to

$$ \gamma(a) < \frac{3r(e_G - e_B) - c(e_G - 2e_B)}{\bar{\theta}(e_G - e_B)(e_G - 2e_B)} \equiv \hat{\gamma}_2. \quad (17) $$

Because the maximum threshold $\hat{\gamma}_2$ decreases with $\bar{\theta}$ and increases with $e_B$,<fnref n="11" /> a covered market with an interior solution is less likely to occur if informed consumers are already sensitive to environmental quality before the awareness-raising campaign and averse to the brown product.

When the segment of informed consumers is smaller, such that $\hat{\alpha}_1(a) < \alpha(x) \le \hat{\alpha}_2(a)$, the market is covered with a corner solution. The corner solution corresponds to prices $p_B^{cc}$ and $p_G^{cc}$ such that the equality $\Theta_B = \Theta_{BG} = \Theta_G$ is satisfied.<fnref n="12" /> The Nash equilibrium then corresponds to a price of the brown product equal to the limit of price $p_B^f$ in the fragmented market when $\alpha(x)$ is at its upper bound of $\hat{\alpha}_1$:

$$ p_B^{cc} = r + \frac{(c - r + \bar{\theta}\gamma(a)e_G)e_B}{2e_G}, \quad (18) $$

while the price of the green product is $p_G^m$ (independent of $\alpha(x)$). The demand for the brown product is then equal to

$$ d_B^{cc} = \frac{2 - \alpha(x)}{2} + \frac{\alpha(x)(c - r)}{2\bar{\theta}\gamma(a)e_G}, \quad (19) $$

and $d_G^{cc} = d_G^m = 1 - d_B^{cc}$.

## 4. Impact of information and awareness-raising campaigns

We assume that in the absence of information and awareness-raising campaigns, the fraction of informed consumers is low (i.e., $\alpha(0) \le \hat{\alpha}_0(0)$), and we analyze the effects of both campaign types on consumer behavior and firm strategies. Appendix B shows the marginal effects of $x$ and $a$ on prices and demands as well as their cross-marginal effects in all possible Nash equilibrium situations.

In the initial segmented market, the firm with the brown product captures all the surplus of uninformed consumers by selling the product at price $r$. The information and awareness-raising campaigns have no direct effect on the behavior of uninformed consumers and the strategies of Firm B. However, the information campaign reduces the fraction of uninformed consumers and thereby indirectly reduces total demand for the brown product and Firm B's profit. In contrast, both the information and awareness-raising campaigns benefit Firm G by increasing the price of the green product and the demand of informed consumers for that product, thereby increasing its profit. At the same time, the two campaigns reinforce each other's effects: informed consumers not only increase but also become more sensitive to environmental quality. The awareness-raising campaign also increases the threshold $\hat{\alpha}_0(a)$ and thereby enlarges the interval of the information campaign that leads to segmentation, such that $\alpha(x) \le \hat{\alpha}_0(a)$. This leads to Proposition 1.

**Proposition 1.** In a segmented market, the awareness-raising campaign complements the information campaign to promote green consumption, enhancing the cost-effectiveness of the green product, through $\gamma(a) > (c - r)/(\bar{\theta}e_G)$, and the mutual reinforcement of the positive effects of the campaigns.

Whenever the information campaign is important enough to raise $\alpha(x)$ above $\hat{\alpha}_0(a)$, the market becomes fragmented. The information and awareness-raising campaigns have an indirect effect on uninformed consumers' behavior, through the price of the brown product. They also affect the behavior of informed consumers, some of whom now buy the brown product. The higher $\alpha(x)$, the greater the demand for the brown product by informed consumers, who also become more numerous, even though the number and, thus, the demand of uninformed consumers decrease. As a result, total demand for the brown product may increase or decrease depending on the magnitude of these two contradictory effects. This leads to Proposition 2.

<footnote n="10">¹⁰ If $e_B < -e_G$, Assumption 2 implies that $c < \frac{r(e_G - e_B)}{-e_G} < \frac{2r(e_G - e_B)}{e_G - 2e_G}$. But if $-e_G < e_B < 0$, we have $c < \frac{3r(e_G - e_B)}{e_G - 2e_G} < \frac{r(e_G - e_B)}{-e_G}$.</footnote>

<footnote n="11">¹¹ The derivative $\partial\hat{\gamma}_2/\partial e_B$ is positive only under the condition for $\hat{\alpha}_2(a) > 0$.</footnote>

<footnote n="12">¹² This situation arises because $\Theta_B$ increases faster than $\Theta_{BG}$ when $\alpha(x)$ increases in a fragmented market, while $\Theta_G$ remains constant, as shown in Fig. 2. Both $\Theta_B$ and $\Theta_{BG}$ reach $\Theta_G$ when $\alpha(x)$ reaches $\hat{\alpha}_1$. This results in a covered market with a corner solution as long as $\alpha(x) < \hat{\alpha}_2(a)$.</footnote>
**Proposition 2.** In a fragmented market, the information campaign increases the demand for the brown product, while the awareness-raising campaign decreases it, thus mitigating the positive effect of the information campaign, as long as $\gamma(a) < -r/(\bar{\theta}e_B)$.

Proposition 2 stems from Appendix B, which shows that $d_B^f$ is an increasing function of $x$ when $\gamma(a) < -r/(\bar{\theta}e_B)$. Because $-r/(\bar{\theta}e_B) > \hat{\gamma}_1$, it follows that when the awareness-raising campaign leads to $\hat{\alpha}_1(a) < 1$, the information campaign has the unexpected effect of increasing the demand for the brown product. This is due to the campaign's price-reducing effect on the brown product, which increases the demand of the (larger fraction of) informed consumers. However, raising awareness among informed consumers tends to turn them away from the brown product, with some of these consumers preferring to abstain rather than consume the product. As a result, the awareness-raising campaign reduces the effect of the information campaign on the demand for the brown product.

In contrast, the information and awareness-raising campaigns push Firm B to lower its price to attract informed consumers. This action tends to reduce its profit, even when the demand for the brown product increases. For the green product, the effects of the information and awareness-raising campaigns remain the same as in the case of segmentation: both campaigns unambiguously benefit the green product and Firm G. Finally, if the awareness-raising campaign is sufficiently effective in raising $\hat{\alpha}_1(a)$ above 1 and $\gamma(a)$ above $-r/(\bar{\theta}e_B)$, the information campaign reduces the total demand for the brown product. The market then remains fragmented for all $x$.

If the information campaign is even more effective in raising $\alpha(x)$ above $\hat{\alpha}_1(a)$, the market will be covered with a corner solution if $\alpha(x) \le \hat{\alpha}_2(a)$ or with an interior solution if $\alpha(x) > \hat{\alpha}_2(a)$. The occurrence of full coverage requires that informed consumers' environmental awareness is not too high, which in turn requires that the awareness-raising campaign is not too effective (i.e., $\gamma(a) < \hat{\gamma}_1$). However, the information campaign has the expected effect of reducing the demand for the brown product in favor of the green product only if informed consumers' environmental awareness is sufficiently high. Conversely, the awareness-raising campaign always produces the expected effects on demand. This leads to Proposition 3.

**Proposition 3.** In a covered market, the information campaign complements the awareness-raising campaign to promote green consumption as long as it keeps the fraction of informed consumers below $\hat{\alpha}_2(a)$, while a more intensive information campaign, leading to $\alpha(x) > \hat{\alpha}_2(a)$, may work in the opposite direction to that of the awareness-raising campaign.

Proposition 3 results from the condition in which $x$ has a positive effect on the demand for the green product. In the case of a corner solution, demand is always increasing; in the case of an interior solution, the condition is $c/(\bar{\theta}(e_G - e_B)) < \gamma(a) < \hat{\gamma}_2$, which can only be satisfied under specific conditions on the parameters. In all cases, the information campaign intensifies the price competition between the two firms, which lowers prices of both products. However, the effects of the awareness-raising campaign are clearly in favor of the green product, whose demand increases, though both prices rise as a result of the increased WTP of informed consumers.

## 5. Optimal information and awareness-raising campaigns

How do the information and awareness-raising campaigns affect the quality of the environment? Analysis of their influence on the demand for the brown and the green products suggests that it depends on the market configuration. In line with the Nash equilibrium, the resulting environmental quality $E(x, a)$, defined in Eq. (2), is characterized as<fnref n="13" />

$$E^s = \frac{1}{2} \left( 2(1 - \alpha(x))e_B + \alpha(x)(\bar{e} + e_G) + \alpha(x) \frac{(c - r)(\bar{e} - e_G)}{\bar{\theta}\gamma(a)e_G} \right) \quad \text{if } \alpha(x) \le \hat{\alpha}_0(a),$$

$$E^f = \frac{1}{2} \left( \bar{e} + (1 - \alpha(x))e_B + \alpha(x)e_G + \alpha(x) \frac{r\bar{e}(e_G - e_B) + c e_B(\bar{e} - e_G)}{2\bar{\theta}\gamma(a)e_B e_G} \right) \quad \text{if } \hat{\alpha}_0(a) < \alpha(x) \le \hat{\alpha}_1(a),$$

$$E^{cc} = \frac{1}{2} \left( (2 - \alpha(x))e_B + \alpha(x)e_G - \alpha(x) \frac{(c - r)(e_G - e_B)}{\bar{\theta}\gamma(a)e_G} \right) \quad \text{if } \hat{\alpha}_1(a) < \alpha(x) \le \hat{\alpha}_2(a),$$

$$E^c = \frac{1}{3} \left( (2 - \alpha(x))e_B + (1 + \alpha(x))e_G - \alpha(x) \frac{c}{\bar{\theta}\gamma(a)} \right) \quad \text{if } \hat{\alpha}_2(a) < \alpha(x) \le 1.$$

### 5.1. Impact of the campaigns on environmental quality

First, we analyze the effects of the two campaigns on environmental quality, as defined above, in each market configuration (see Table C.1 in Appendix C) to determine the optimal information and awareness campaigns for the environmental NGO in each configuration. Fig. 3 illustrates the effects of the campaigns, through $\alpha(x)$ and $\bar{\theta}\gamma(a)$, on environmental quality, depending on the extent of the aversion effect of informed consumers.<fnref n="14" />

When the market is segmented, as it is before the campaigns (i.e., $\alpha(0) \le \hat{\alpha}_0(a)$), informing consumers is beneficial for the environment, while making informed consumers more aware of the environmental quality of products is detrimental. The information campaign leads newly informed consumers to abandon the brown product and either stop consuming both the brown and green

<footnote n="13">¹³ The subscript $s$ denotes the segmentation case.</footnote>

<footnote n="14">¹⁴ To illustrate Fig. 3, we use $e_G = 1$, $\bar{e} = 2$, $r = 3$, $c = 4$ and $e_B = -0.5$ in panel (a) and $e_B = -2$ in panel (b). The darker the surface, the higher the $E$ level. The black thin lines correspond to the contour lines. The dashed white lines correspond to $E$ when $\alpha(x)$ equals the thresholds $\hat{\alpha}_0(a)$, $\hat{\alpha}_1(a)$, and $\hat{\alpha}_2(a)$.</footnote>
<figure><img src="image_6.png" /><figcaption>Fig. 3. Effects of $\alpha(x)$ and $\gamma(a)$ on environmental quality.</figcaption></figure>

products or consume only the green product, both behavioral changes that improve environmental quality. However, the awareness-raising campaign will cause some informed consumers who were previously abstaining to consume the green product. This becomes environmentally harmful as soon as the green product exerts a negative impact, even a small one, on environmental quality, while abstention remains the most ecological behavior. The information campaign therefore takes precedence over the awareness-raising campaign. Importantly, however, an increase in the awareness-raising campaign leads to an increase in the maximum fraction of consumers $\hat{a}_0(a)$ compatible with a segmented market. Thus, even if $\alpha$ reduces the quality of the environment for a given $x$, such that $\alpha(x) \le \hat{a}_0(a)$, it allows even more informed consumers to be in a segmented market, which in turn leads to an increase in environmental quality.

When the campaigns result in a fragmented market (i.e., $\hat{a}_0(a) < \alpha(x) \le \hat{a}_1(a)$), raising environmental awareness of informed consumers is always beneficial for the environment, but informing them is not always beneficial. Indeed, after some informed consumers buy the brown product in the fragmented market, informing even more consumers degrades environmental quality if the awareness-raising campaign is insufficient. Such an unexpected situation occurs if $\partial E^f / \partial x < 0$. According to Table C.1, this requires:

$$ \gamma(a) < \frac{r \bar{e}(e_G - e_B) + c e_B (\bar{e} - e_G)}{-\bar{\theta}(e_G - e_B) e_G e_B} \equiv \hat{\gamma}_3. \quad (20) $$

Therefore, the environmental goal requires launching an effective awareness-raising campaign in such a way as to increase $\gamma(a)$ above the threshold $\hat{\gamma}_3$, allowing the information campaign also to be effective and, in the same way, directly improve environmental quality by diverting some newly informed consumers away from the brown product. Because $\hat{\gamma}_3$ increases with $e_B$, an effective information campaign requires either a significant awareness-raising campaign ($\gamma(a) > \hat{\gamma}_3$) or a high aversion effect $|e_B|$ (low $\hat{\gamma}_3$).<fnref n="15" /> In addition, because $\hat{\gamma}_3 > \hat{\gamma}_1$, $\hat{a}_1(a) > 1$ when $\gamma(a) > \hat{\gamma}_3$, such that only segmented and fragmented markets are possible.<fnref n="16" /> Then, the following lemma holds:

**Lemma 1.** The aversion effect $|e_B|$ and the environmental awareness $\bar{\theta}\gamma(a)$ of informed consumers act as substitutes, making the information campaign effective beyond $\hat{a}_0(a)$ through $\gamma(a) > \hat{\gamma}_3$.

Finally, when the market is fully covered (i.e., $\alpha(x) > \hat{a}_1(a)$), improving environmental quality requires reducing demand for the brown product in favor of the green product. The analysis of demand in Section 3 indicates that this happens either when $\alpha(x) \le \hat{a}_2(a)$ or when $c/(\bar{\theta}(e_G - e_B)) < \gamma(a) < \hat{\gamma}_2$. However, the level of environmental quality drops sharply as the covered market moves from a corner to an interior solution (i.e., when $\alpha(x) = \hat{a}_2(a)$).<fnref n="17" /> This is due to the significant decrease in the price of the brown product, which leads to demand for the brown product at the expense of the green product. As a result, environmental quality is maximized for an information campaign that leads to a fraction $\hat{a}_2(a)$ of informed consumers, and an awareness-raising campaign as large as possible.

<footnote n="15">¹⁵ $\partial \hat{\gamma}_3 / \partial e_B = (r\bar{e}(e_G - e_B)^2 - c(\bar{e} - e_G)e_B^2) / (\bar{\theta}e_G e_B^2(e_G - e_B)^2) > 0$ as soon as Assumption 2 is verified.</footnote>

<footnote n="16">¹⁶ $\hat{\gamma}_3 - \hat{\gamma}_1 = (r(e_G - e_B)(\bar{e} - e_G + e_B) + c e_B(\bar{e} - 2e_G + e_B)) / (-\bar{\theta}(e_G - e_B)e_G e_B) > 0$ since $r(e_G - e_B) > -c e_B$ (from Assumption 2) and $(\bar{e} - e_G + e_B) > (\bar{e} - 2e_G + e_B)$.</footnote>

<footnote n="17">¹⁷ The condition for $E^{cc} > E^c$ in $\hat{a}_2(a)$ is $\gamma(a) < (-3r\bar{e}(e_G - e_B) + c(e_G - 2e_B)) / (\bar{\theta}(e_G - e_B)(e_G + e_B))$ where the upper bound is higher than $\hat{\gamma}_2$. Therefore, as soon as $\hat{a}_2(a) < 1$, this condition is satisfied.</footnote>
## 5.2. Optimal combination of information and awareness-raising campaigns

Now that we know how the two campaigns affect environmental quality in each market configuration, we can determine the optimal information and awareness campaigns for the environmental NGO. The campaigns must be combined to achieve the highest possible environmental quality with a given budget (R) and campaign prices ($w_x$ and $w_a$). More precisely, the optimal articulation of the two campaigns depends on their relative cost-effectiveness (i.e., their relative environmental effectiveness $E_x/E_a$ compared to their relative cost $w_x/w_a$). In other words, the saturation of the budget constraint that allows maximizing the environmental quality depends not only on the unit cost of each campaign but also on its marginal impact on environmental quality through $a'(x)$ and $\gamma'(a)$.

The optimal information and awareness-raising campaigns cannot be determined by simply maximizing environmental quality $E(x, a)$, using the usual optimization method. Indeed, $E(x, a)$, characterized by $E^k(x, a)$, is a piecewise linear function of $x$ and $a$, with $a(x)$ between 0 and 1, and $\gamma(a)$ between 1 and $\bar{\gamma}$, defined by the existence conditions of the different market configurations $k = \{s, f, cc, c\}$ that vary with $a$ as well. Therefore, we determine the optimal information and awareness-raising campaigns as follows:

$$ \max_a \left[ \max_x E(x, a) \right] \quad \text{subject to} \quad w_x x + w_a a \le R $$

We thus proceed in two steps. First, we determine $x^*$ that maximizes $E(x, a)$ for a given $a$. Second, we derive $a^*$ that maximizes $E(x^*, a)$ under the budget constraint $w_x x^* + w_a a \le R$. To do this, we define $\hat{x}_i(a)$ as the information campaign that leads to informing $\alpha(\hat{x}_i(a)) = \hat{a}_i(a)$ consumers (with $i = 0, 1, 2$), $\bar{x}$ as the information campaign that makes it possible to inform all consumers (i.e., $\alpha(\bar{x}) = 1$), and $\hat{a}_3$ as the awareness-raising campaign such that $\gamma(\hat{a}_3) = \hat{\gamma}_3$. In Appendix C, we show that $x^*$ is either $\hat{x}_0(a)$ with a segmented market, $\hat{x}_2(a)$ with a covered market with a corner solution or $\bar{x}$ with a fragmented market or a covered market with a corner solution. Then we show that $a^*$ depends on the budget $R$, the campaign prices and the relative cost-effectiveness of the campaigns. Proposition 4 characterizes the optimal campaigns.

**Proposition 4.** If the aversion effect $|e_B|$ is significant enough to allow for both segmented and fragmented markets, the optimal information and awareness-raising campaigns are as follows:

(i) With a small budget $R \le w_x \hat{x}_0(\hat{a}_3) + w_a \hat{a}_3$, such that $\gamma(a) \le \hat{\gamma}_3$, to conduct moderate information campaign $\hat{x}_0(a^*)$ and awareness-raising campaign $a^*$ to inform only $\hat{a}_0(a^*)$ consumers and exhaust the budget, $w_x \hat{x}_0(a^*) + w_a a^* = R$, with $a^* \le \hat{a}_3$.

(ii) With a higher budget $R$ allowing $\gamma(a) > \hat{\gamma}_3$ the optimal campaigns depend on the relative cost-effectiveness of the information and awareness-raising campaigns:

(a) In the case of greater cost-effectiveness of the awareness-raising campaign, to conduct a moderate information campaign $\hat{x}_0(a^*)$ to inform only $\hat{a}_0(a^*)$ consumers and an intensive awareness-raising campaign $a^*$ exhausting the budget, $w_x \hat{x}_0(a^*) + w_a a^* = R$, with $a^* > \hat{a}_3$.

(b) In the case of greater cost-effectiveness of the information campaign, to conduct an intensive information campaign $\bar{x}$ to inform all consumers and a moderate awareness-raising campaign $a^{**}$ exhausting the budget, $w_x \bar{x} + w_a a^{**} = R$, with $\hat{a}_3 < a^{**} < a^*$.

If the aversion effect $|e_B|$ is close to zero, such that the market is covered as soon as a small fraction $\hat{a}_1(a)$ of consumers is informed, the optimal information and awareness-raising campaigns are to inform as many consumers as possible, in the limit of $\hat{a}_2(a^*)$, and to devote the remaining budget to an even more effective awareness-raising campaign: $w_x \min(\hat{x}_2(a^*), \bar{x}) + w_a a^* = R$.

Lemma 1 and Proposition 4 highlight the following two polar cases (illustrated in Fig. 3 and demonstrated in Appendix C):

* A high aversion effect $|e_B|$ makes the information campaign effective by diverting the most informed consumers away from the brown product, so that the market cannot be covered and $E^f(\bar{x}, a) > E^s(\hat{x}_0(a), a)$ when $\gamma(a) > \hat{\gamma}_3$. Because $\hat{\gamma}_3$ decreases with the aversion effect, the minimum awareness-raising campaign condition is easy to satisfy. The optimal environmental campaign is then to inform all consumers and to allocate the remaining budget to the awareness-raising campaign. Such campaign strategies $(\bar{x}, a^{**})$ are indeed optimal if the relative campaign cost $w_x/w_a$ is low, which incentivizes the NGO to favor the information campaign over the awareness-raising campaign. This leads to a fragmented market with only informed consumers and maximum environmental quality $E^f(\bar{x}, a^{**})$. In contrast, because the information campaign is more effective in the segmented market than in the fragmented market ($E^s(\bar{x}) > E^f(\bar{x})$), the NGO has an interest in keeping the market segmented and thus favors the awareness-raising campaign over the information campaign whenever the relative campaign cost $w_x/w_a$ is higher. The optimal campaigns $(\hat{x}_0(a^*), a^*)$ are then to increase the information and awareness-raising efforts to keep $\hat{a}_0(a^*)$ informed consumers in the segmented market while exhausting the entire budget. The maximum environmental quality is then $E^s(\hat{x}_0(a^*), a^*) > E^f(\bar{x}, a^{**})$, with $a^* > a^{**}$.

* A small (but not too small) aversion effect $|e_B|$ makes the information campaign less effective, as the least environmentally conscious consumers might be tempted to consume the brown product. The market can be covered as long as the awareness-raising campaign remains modest (with $\gamma(a) \le \hat{\gamma}_1 < \hat{\gamma}_3$). Then, $E^s(\hat{x}_0(a), a) > E^k(\bar{x}, a)$ for all $a$ and $k = f, cc, c$. The lower the aversion effect, the easier it is to satisfy the condition of a maximum awareness-raising campaign, $\gamma(a) < \hat{\gamma}_3$. The optimal environmental campaign is then to keep the market segmented by informing $\hat{a}_0(a^*)$ consumers and to devote the remaining budget to the awareness-raising campaign $a^*$.

However, when the aversion effect is so small that the market is covered for a small fraction of informed consumers (because $\hat{a}_0(a)$ and $\hat{a}_1(a)$ tend toward 0), the optimal environmental campaign is to inform the largest number of consumers in the limit of $\hat{a}_2(a^*)$ and to
<figure><img src="image_7.png" /><figcaption>Fig. 4. Effects of $\alpha(x)$ and $\gamma(a)$ on consumer surplus.</figcaption></figure>

spend the remaining budget on the awareness-raising campaign $a^*$. Such a campaign reduces as much as possible the consumption of the brown product by uninformed and informed consumers in favor of the green product by the largest possible number of informed consumers.

# 6. Welfare implications

Although the environmental NGO aims to maximize environmental quality, which contributes to social welfare, this objective does not always align with economic welfare, which is defined as the sum of consumer surplus and profits. Therefore, we analyze how campaigns affect the components of economic welfare before discussing the relationship between environmental and economic components of welfare.

## 6.1. Consumer surplus

The impact of the information and awareness-raising campaigns on consumer surplus depends on the type of consumer (informed or not) and the market configuration in the Nash equilibrium. We provide the expressions for the consumer surplus in Appendix D. Fig. 4 illustrates the effects of the campaigns on consumer surplus through $\alpha(x)$ and $\bar{\theta}_{\gamma}(a)$, depending on the extent of the aversion effect of informed consumers.<fnref n="18" />

In the case of segmentation, Firm B captures the entire surplus of uninformed consumers. The surplus of informed consumers does not depend on the fraction of informed consumers $\alpha(x)$ because the monopoly price of the green product is independent of $\alpha(x)$. However, the awareness-raising campaign improves this surplus by increasing the gross utility of consumers of the green product ($r + \theta_{\gamma}(a)e_G$). As a result, total consumer surplus benefits from both the information campaign<fnref n="19" /> and the awareness-raising campaign.

In the case of fragmentation, the surplus of the uninformed consumers benefits from an increase in $\alpha(x)$, which causes the price of the brown product to fall. But because they are fewer, their total surplus decreases with $\alpha(x)$. Conversely, total surplus is worsened by an increase in $\alpha$, which leads to higher prices. In contrast, the surplus of the informed consumers increases with $\alpha$. Only informed consumers who consume the green product benefit from an increase in $\alpha$, while those who consume the brown product are worse off with an increase in $\alpha$. Consequently, the effects of the information and awareness-raising campaigns on total consumer surplus are ambiguous.<fnref n="20" />

In the case of a covered market with a corner solution, the prices are frozen at their limits reached for $\alpha(x) = \hat{\alpha}_1(a)$. Therefore, the surpluses of both types of consumers are independent of $\alpha(x)$. However, they are increasing in $\alpha$, which favors a decrease in the price of the brown product and an increase in the gross utility of (informed) consumers of the green product not offset by the increase in the price of the green product. The total surplus is therefore improved by the information campaign only if the surplus of the uninformed consumers is lower than that of the informed consumers, while it is always improved by the awareness-raising campaign.

In the case of a covered market with an interior solution, the information campaign positively affects the surplus of uninformed consumers if the production cost of the green product is sufficiently high (such that $c > 3r$) or if the awareness-raising campaign is sufficiently strong relative to the information campaign. However, surplus is always degraded by the awareness-raising campaign.

<footnote n="18">¹⁸ We use the same parameters as in Fig. 3, the same gray gradient based on the consumer surplus level, and the same dashed white lines to highlight the changes in market configuration.</footnote>

<footnote n="19">¹⁹ This is because $\alpha(x)$ increases the total surplus of the informed consumers.</footnote>

<footnote n="20">²⁰ See Appendix D.</footnote>
<figure><img src="image_8.png" /><figcaption>Fig. 5. Effects of $a(x)$ and $\gamma(a)$ on total profits.</figcaption></figure>

Thus, the surplus of informed consumers is always improved by the information campaign but reduced by the awareness-raising campaign.

## 6.2. Profits

The impact of the information and awareness-raising campaigns on profits of both firms is unsurprising, except in the case of a covered market with an interior solution. Indeed, in all the other market configurations, the profit of Firm B decreases and that of Firm G increases as a result of the information and awareness-raising campaigns. Nevertheless, when the information campaign is so effective and the awareness-raising campaign sufficiently limited that the market is covered with an interior solution, the profits of both firms decrease with $a(x)$ because of the intense price competition, which causes the prices to fall. Conversely, because prices are strategic complements, an increase in $a$ leads both firms to increase their prices and then benefit from higher profits.

Consequently, as expected, only Firm G would have an interest in the information and awareness-raising campaigns. As these campaigns have opposite effects on the profits of the two firms, their effect on total industry profits is ambiguous. However, Fig. 5 shows that, regardless of the extent of the aversion effect, total profits tend to decrease with campaign intensity, because Firm B's loss is always larger than Firm G's benefit.<fnref n="21" />

## 6.3. Social welfare

Previous results have highlighted the ambiguous effects of information and awareness-raising campaigns on consumer surplus and total profits. Therefore, we turn to numerical applications to further analyze the interplay between the environmental NGO and social objectives. We examine the two polar cases that were previously used to plot the effects of $a(x)$ and $\bar{\theta}_{\gamma}(a)$ on environmental quality (Fig. 3), consumer surplus (Fig. 4) and total profit (Fig. 5). These cases are representative of the model's results, which do not significantly change with other parameters (except when $e_B$ is very close to zero). Fig. 6 illustrates their total effects on economic welfare.

In line with Proposition 4, Fig. 3 shows that, depending on the budget constraint of the environmental NGO, which limits the maximum possible level of $\bar{\theta}_{\gamma}(a)$, the optimal campaigns will either be to inform $\hat{a}_0(a^*)$ consumers and spend the maximum $a^*$ on awareness campaign, or to inform all consumers and spend the remaining budget on the awareness campaign.<fnref n="22" /> The higher the aversion effect, the higher the achievable environmental quality through the campaigns.

Figs. 4–6 show that the optimal campaigns always improve consumer surplus, but decrease total profits compared to a situation without any campaign (see also Table D.2 in Appendix D). As a result, they can only improve economic welfare when the environmental NGO benefits from a large budget and conducts impactful campaigns that inform all consumers and significantly increase their environmental awareness (i.e., when the budget allows $\gamma(a) > \hat{\gamma}_3$). In other words, when the budget constraint is low, informing all consumers and allocating the remaining budget to the awareness-raising campaign maximizes environmental quality, consumer surplus and economic welfare, even if total profits are reduced. However, when the aversion effect is low and the budget constraint is tight (i.e., maximum $\bar{\theta}_{\gamma}(a)$ is low in Fig. 6), the environmental objective generally contradicts the societal one. Maximizing E requires informing $\hat{a}_0(\bar{a})$ consumers and conducting the most intensive awareness raising campaign ($\bar{a}$), while maximizing economic welfare would require informing and raising awareness among no consumers (see Table D.3 in Appendix D). In this case, the negative

<footnote n="21">²¹ We use the same numerical application as in the previous figures.</footnote>

<footnote n="22">²² More precisely, in panel (a), the first solution arises when $\bar{\theta}_{\gamma}(a) < \bar{\theta}_{\hat{\gamma}_3} = 9.33$ and the second solution arises otherwise. In panel (b), the threshold is $\bar{\theta}_{\hat{\gamma}_3} = 1.67$.</footnote>
<figure><img src="image_9.png" /><figcaption>Fig. 6. Effects of $a(x)$ and $\gamma(a)$ on economic welfare.</figcaption></figure>

effects of the campaigns on total profits outweigh their positive effects on consumer surplus.<fnref n="23" /> When the aversion effect is high and the budget constraint is tight, the NGO's objective completely contradicts the social objective. Informing all consumers improves environmental quality, but it leads to the lowest economic welfare.<fnref n="24" /> This implies that the regulator might subsidize the NGO to enable it to conduct intensive information and awareness campaigns, thereby increasing environmental quality, consumer surplus, and economic welfare. However, this policy would harm the industry's profits because the green firm's increased profits would not offset the brown firm's losses from the NGO's campaigns.

## 7. Discussion

Our model provides a general framework for analyzing and comparing the market effects of consumer information and awareness-raising campaigns on the environmental quality. In particular, we show that the combination of assumptions about the fraction of informed consumers and the shape of consumers' preferences between the two products plays a crucial role in market coverage by conditioning on the possibility that some consumers abstain.

The fundamental difference between our model of vertical differentiation and models in the literature lies in the assumptions made about the perception of the characteristics of the two products offered to heterogeneous consumers.<fnref n="25" /> Heijnen and Schoonbeek (2008), Heijnen (2013) and Van der Made and Schoonbeek (2009) assume that both products are more or less harmful to the environment and therefore are downgraded by environmentally sensitive consumers. In this case, consumers who are most sensitive to environmental quality are more likely to abstain from consumption. In contrast, Buehler and Schuett (2014) and Heyes et al. (2020) assume that both products are more or less green, and García-Gallego and Georgantzís (2009) assume that they are offered by firms that are more or less environmentally responsible, which is valued by consumers. Consumers likely to buy neither product are those who are least sensitive to the environment (in the studies of García-Gallego and Georgantzís (2009) and Heyes et al. (2020), they buy the brown “backstop” good). In the first case, the perceived harm keeps the most conscious consumers away from the two products. In the second case, the high price of green products keeps the least conscious consumers away.

Following that work, and in contrast with García-Gallego and Georgantzís (2010), we argue that the market is not covered in all cases in which the products offered do not correspond to necessary goods or in which substitutes for use exist, but not for the same reasons. Our framework is distinct from studies dealing explicitly with consumer information campaigns that shed light on either the green or brown product (Feddersen and Gilligan, 2001; Heijnen, 2013) or the difference in damage caused by the two products (Sartzetakis et al., 2012). Our assumption is that the information campaign conveys to consumers the respective qualities of the two products —not only their quality difference, as Sartzetakis et al. (2012) suggest, but also their absolute level— and encourages consumers to reject the brown product. This aversion effect may stem from a call to boycott the brown product, which leads to a real-world outcome: some consumers abstain because one of the products is unacceptable in their eyes but they nevertheless find the other product too expensive. This represents a certain activism on the part of the most environmentally sensitive consumers, who

<footnote n="23">²³ As shown in Table D.3, consumer surplus is maximized with $\hat{a}_1(\bar{a})$ informed consumers who are the most environmentally conscious (i.e., $a = \bar{a}$). For instance, when $e_B = -1/2$ and $\bar{\theta}_\gamma(\bar{a}) = 4$, consumer surplus is maximized for $\hat{a}_1(\bar{a}) = 0.8$.</footnote>

<footnote n="24">²⁴ For instance, when $e_B = -2$ and $\bar{\theta}_\gamma(a) \le 4$, environmental quality is maximized when $a(x) = 1$ and $\bar{\theta}_\gamma(\bar{a}) = 4$, while economic welfare is minimized when $a(x) = 1$ and $\bar{\theta}_\gamma(a) = 2.34$ and is maximized when $a(x) = 0$ and $\bar{\theta}_\gamma(a) = 1.1$.</footnote>

<footnote n="25">²⁵ Another difference lies in our assumption of exogenous environmental qualities, contrary to part of the literature that endogenizes them (García-Gallego and Georgantzís, 2009; Heijnen, 2013; Buehler and Schuett, 2014; Heyes et al., 2020). We consider a situation in which an unlabeled brown product already exists alongside a labeled product that the NGO decides to promote without certifying or defining the label's stringency. Assuming firms would respond to an NGO campaign by improving their environmental quality is inconsistent with the central assumption of information asymmetry, firms B and G having no incentives to make improvements that would not be visible to consumers.</footnote>
then prefer to do without the green product if they cannot afford it. Not only does this feature make the model more realistic, but it also allows us to describe the price war that the two companies wage to gain market share among informed consumers. We show that Firm B can only achieve market share if the fraction of informed consumers is intermediate; however, increasing this fraction will not be beneficial for the environment if the NGO's budget is insufficient to avoid this situation.

Among the studies examining the effects of a consumer awareness-raising campaign in the same duopoly framework as ours, those of García-Gallego and Georgantzís (2010) and Van der Made and Schoonbeek (2009) are diametrically opposed examples, with zero aversion in the former (both products are green) and a strong aversion in the latter (both products are brown). In both cases, the campaign clearly leads to a greening of the market, consistent with the curve obtained for $\alpha = 1$ at the right limit of the graphs in panels (a) and (b) of Fig. 3. In addition, we show that for a given fraction of informed consumers, raising awareness is always beneficial for the environment, unless this fraction is low enough for the market to remain segmented.

To our knowledge, Sartzetakis et al. (2012) and Brécard and Chiroleu-Assouline (2025) are the only researchers to consider the effects of increasing the fraction of informed consumers; however, the analysis by Sartzetakis et al. (2012) assumes that consumers are homogeneous in terms of their environmental sensitivity in a market deemed a priori to be covered.

While we are the first to explicitly consider the joint implementation of information and awareness-raising campaigns, Van der Made and Schoonbeek (2009) and Heyes et al. (2020) combine these two features of consumer behavior through ad hoc assumptions. Van der Made and Schoonbeek (2009) assume that the marginal effect of the awareness-raising campaign is a priori stronger for the more polluting product than for the less polluting product: the campaign thus accentuates the environmental difference between the two products. In Heyes et al. (2020), the greater the sensitivity of consumers, the greater the incentive to voluntarily acquire costly information about the products' environmental quality. On the contrary, our model enables us to analyze precisely all the mechanisms involved in the interaction between the two types of campaigns.

How do our assumptions shape our results? Let us relax the assumption that the NGO only provides information on the environmental quality of the products available on the market and assume that the NGO emphasizes that non-consumption is preferable to the green product because even this product is harmful to the environment, leading consumers to value non-consumption.<fnref n="26" /> In this case, the model differs from those of Heijnen and Schoonbeek (2008), Heijnen (2013) and Van der Made and Schoonbeek (2009) in only two ways. First, it assumes that the production cost of the green product is too high to attract uninformed consumers. Second, it assumes a growing share of informed consumers who have an aversion only toward the brown product, while having an attraction to the green product, but to a lesser extent than to non-consumption. On the segment of the informed consumers, the model describes a very standard case of vertical differentiation between two more or less polluting products. Consumers with the highest willingness to pay for the environment abstain from consuming. As a result, the market could only be segmented, or uncovered in the classical sense. However, we show in Appendix E that promoting the green product is useless in this case because, due to its production cost, it cannot compete with the brown product or overcome the appeal of non-consumption. Paradoxically, the brown product is the only one offered on the market, and the most environmentally conscious consumers are abstaining from purchasing it. An awareness campaign would improve environmental quality by reducing demand for the brown product, whereas an information campaign would have the opposite effect.

## 8. Conclusion

How does consumers' awareness of the environmental characteristics of products available on the market influence their behavior? Unlike existing literature, which tends to consider either the provision of information to consumers or their sensitization to green products, the present research engages in an in-depth investigation of the interaction between information and sensitization. Our model is based on the coexistence of uninformed consumers, who do not distinguish between green and brown products, and informed consumers, whose WTP for green products is heterogeneous. An original feature of our model is the addition of an aversion effect on the brown product for informed consumers, taking to the extreme the standard assumption that these consumers would simply prefer the green product over the brown one. This explains why, for certain parameter configurations, the market can be uncovered; that is, informed consumers with intermediate WTP refrain from consuming the brown product and do not switch to the green product. We also assume that the green product is not environmentally perfect. Therefore, abstention is beneficial for environmental quality.

We show that information and sensitization campaigns can be mutually reinforcing but, far from being perfect substitutes, in some cases they can also have opposite effects on environmental quality. For a small fraction of informed consumers, leading to a segmented market, increasing this fraction reduces the demand for the brown product while enhancing the demand for the green product. Raising environmental awareness is only useful insofar as it further increases the maximum share of informed consumers compatible with a segmented market. However, as abstention is the greenest behavior, increasing global consumption is detrimental to the environment. Consequently, improving environmental quality requires informing as many consumers as possible while increasing their environmental awareness, to deter these informed consumers from switching to the brown product and, thus, to keep the market segmented. However, when the fraction of informed consumers exceeds the threshold, market fragmentation results; the least informed and environmentally aware consumers buy the brown product, some informed consumers boycott it, and only the most informed and environmentally aware consumers buy the green product. In this case, an information campaign paradoxically increases demand for the brown product if informed consumers are not sufficiently environmentally aware and/or their aversion effect is low. Consequently, improving environmental quality requires increasing the environmental awareness of informed consumers

<footnote n="26">²⁶ We thank an anonymous reviewer for suggesting that we consider utility from abstention as equal to $u_A = \theta\gamma(a)\bar{c}$.</footnote>
without informing additional consumers. When the fraction of informed consumers is larger, leading to a covered market, reducing the demand for the brown product always benefits the environment. This requires informing a large fraction of consumers, but not necessarily all of them, and sensitizing them as much as possible.

We also show that the optimal information and awareness-raising campaigns for improving environmental quality depend on the degree of the aversion effect. An optimal decision is to inform as many consumers as possible and to devote the remaining campaign budget to increasing awareness if the environmental awareness of informed consumers or their aversion effect is high enough to make the information campaign effective. The higher the aversion effect, the lower the environmental awareness required to make informing as many consumers as possible optimal, in line with the campaign budget. Otherwise, in the case of a medium aversion effect coupled with medium environmental awareness of informed consumers, an optimal information campaign involves informing no more than the maximum (small) fraction of consumers that allows the market to remain segmented and thus avoid informed consumers' consumption of the brown product. NGOs can thus use the awareness-raising campaign as a complementary tool to improve environmental quality, within the limits of the campaign budget. However, if the aversion effect is close to zero, such that the market is covered for a small fraction of informed consumers, the optimal decision is to combine information and awareness-raising campaigns to divert as many consumers as possible from the brown product.

Finally, we show that improving environmental quality can conflict with the enhancement of economic welfare, since NGO campaigns tend to increase consumer surplus and reduce total industry profits due to a drop in profits from the brown product. Only a sufficiently high campaign budget can enable improvements in both economic welfare and environmental quality by informing all consumers and raising their environmental awareness. Otherwise, low-budget campaigns improve environmental quality at the expense of economic welfare.

Although in this article we explicitly consider the case of information and awareness-raising campaigns carried out by environmental NGOs, we argue that most of our results would remain unchanged if the instigator of the campaigns were different. In the case of regulators, whose objective is to maximize social welfare, not only environmental quality, the only difference would be in the trade-off between the two types of campaigns, depending on the relative weight of different social welfare components.

### CRediT authorship contribution statement

**Dorothée Brécard:** Writing – review & editing, Writing – original draft, Methodology, Investigation, Formal analysis, Conceptualization.
**Mireille Chiroleu-Assouline:** Writing – review & editing, Writing – original draft, Methodology, Investigation, Formal analysis, Conceptualization.

### Declaration of competing interests

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

### Acknowledgment

This research has been funded by the French National Research Agency (ANR-24-CE26-7833) and the program Investissements d'Avenir of the French government (ANR-17-EURE-001). The authors thank participants in the 11th Annual Conference of the French Association of Environmental and Resource Economists, the 30th Annual Conference of the European Association of Environmental and Resource Economists, the 41st Journées de Microéconomie Appliquée, the Paris 2025 Workshop on Lobbying Issues, and the GIAM 2025 Workshop at Galatasaray University for their helpful comments. They are grateful to the Editor, Andreas Lange, and three anonymous reviewers for their insightful suggestions.

## Appendix A. Proofs of market configurations according to $\alpha(x)$

Let $\Theta_B \equiv -(r - p_B)/e_B$ be the marginal WTP of the informed consumer who is indifferent between consuming the brown product at price $p_B$ and consuming nothing, let $\Theta_G \equiv (p_G - r)/e_G$ be the marginal WTP of the informed consumer who is indifferent between consuming the green product at price $p_G$ and consuming nothing, and let $\Theta_{BG} \equiv (p_G - p_B)/(e_G - e_B)$ be the marginal WTP of the informed consumer who is indifferent between consuming the brown product at price $p_B$ and consuming the green product at price $p_G$. As uninformed consumers all consume the (cheapest) brown product in the Nash equilibrium, the market configurations are characterized by four inequalities<fnref n="27" />:

* Segmentation: $\Theta_B \le 0 < \Theta_G < \bar{\theta}_\gamma(a) \leftrightarrow 0 \le \alpha(x) \le \hat{\alpha}_0(a)$;

* Fragmentation: $0 < \Theta_B < \Theta_G < \bar{\theta}_\gamma(a) \leftrightarrow \hat{\alpha}_0(a) < \alpha(x) \le \hat{\alpha}_1(a)$;

* Full coverage with a corner solution: $0 < \Theta_B = \Theta_{BG} = \Theta_G < \bar{\theta}_\gamma(a) \leftrightarrow \hat{\alpha}_1(a) < \alpha(x) \le \hat{\alpha}_2(a)$; and

* Full coverage with an interior solution: $\Theta_G < \Theta_{BG} < \Theta_B$ and $0 < \Theta_{BG} < \bar{\theta}_\gamma(a) \leftrightarrow \hat{\alpha}_2(a) < \alpha(x) \le 1$.

We next detail the calculation of the three thresholds $\hat{\alpha}_i(a)$ ($i = 0, 1, 2$).

We derive the thresholds $\hat{\alpha}_0(a)$ and $\hat{\alpha}_1(a)$ from the conditions for a fragmented market, where prices are $p_B^f$ and $p_G^m$:

<footnote n="27">²⁷ We used Mathematica software for all proofs. The data file is available upon request.</footnote>
• $0 < \Theta_B$ comes down to $p_B^f < r$, which requires $\alpha(x) > \frac{-\bar{\theta}\gamma(a)e_B}{r - \bar{\theta}\gamma(a)e_B} = \hat{\alpha}_0(a)$;

• $\Theta_B < \Theta_G$ requires $\alpha(x) < \frac{-\bar{\theta}\gamma(a)e_B e_G}{re_G + (c-r)e_B} = \hat{\alpha}_1(a)$.

We derive the thresholds $\hat{\alpha}_2(a)$ from the conditions for a covered market with an interior solution $\Theta_B > \Theta_G$. In this case, the reaction function of Firm B which maximizes its profit $\pi_B = p_B \left( 1 - \alpha(x) + \alpha(x) \frac{p_G - p_B}{\bar{\theta}\gamma(a)(e_G - e_B)} \right)$ is

$$p_B = \frac{p_G}{2} + (1 - \alpha(x)) \frac{\bar{\theta}\gamma(a)(e_G - e_B)}{2\alpha(x)}.$$

The reaction function of Firm G which maximizes its profit $\pi_G = (p_G - c)\alpha(x) \frac{\bar{\theta}\gamma(a)(e_G - e_B) - p_G + p_B}{\bar{\theta}\gamma(a)(e_G - e_B)}$ is

$$p_G = \frac{1}{2}(p_B + c + \bar{\theta}\gamma(a)(e_G - e_B)).$$

The equilibrium prices are $p_B^c$ and $p_G^c$, given in Eq. (13), are the unique solution of the system of 2 reaction function equations. Using expressions of $p_B^c$ and $p_G^c$, it is easy to show that $\Theta_B > \Theta_G$ if

$$\frac{\alpha(x) \left( \bar{\theta}\gamma(a)(e_G - e_B)(e_G + e_B) + 3r(e_G - e_B) - c(e_G - 2e_B) \right) - \bar{\theta}\gamma(a)(e_G - e_B)(2e_G - e_B)}{-3\alpha(x)e_G e_B} > 0.$$

Such a condition implies that:

$$\alpha(x) > \frac{\bar{\theta}\gamma(a)(e_G - e_B)(2e_G - e_B)}{\bar{\theta}\gamma(a)(e_G - e_B)(e_G + e_B) + 3r(e_G - e_B) - c(e_G - 2e_B)} = \hat{\alpha}_2(a)$$

if the denominator is positive, which is verified as soon as $e_G > -e_B$ and $c < 3r(e_G - e_B)/(e_G - 2e_B)$. Moreover, $\hat{\alpha}_2(a) < 1$ if $\gamma(a) < \frac{3r(e_G - e_B) - c(e_G - 2e_B)}{\bar{\theta}(e_G - e_B)(e_G - 2e_B)} = \hat{\gamma}_2$.

In the intermediate case in which $\hat{\alpha}_1(a) < \alpha(x) < \hat{\alpha}_2(a)$, the market is covered with a corner solution because the equilibrium prices in a fragmented market, $p_B^f$ and $p_G^m$, lead to $\Theta_G < \Theta_B$ (because $\hat{\alpha}_1(a) < \alpha(x)$) which contradicts the condition for a fragmented market, and the equilibrium prices in a covered market with an interior solution, $p_B^c$ and $p_G^c$, lead to $\Theta_G > \Theta_B$ (because $\alpha(x) < \hat{\alpha}_2(a)$) which contradicts the condition for such a covered market. Therefore, we have a corner solution in which the prices are such that $\Theta_G = \Theta_{BG} = \Theta_B$ for all $\alpha(x) \in [\hat{\alpha}_1, \hat{\alpha}_2]$. The only prices that satisfy this equality are prices $p_B^{cc} = p_B^f|_{\alpha(x)=\hat{\alpha}_1}$ and $p_G^{m}$.

The conditions for the three thresholds to allow all the market configurations to emerge are $0 < \hat{\alpha}_0 < \hat{\alpha}_1 < \hat{\alpha}_2 < 1$, which require $\gamma(a) < \hat{\gamma}_2$ and $\hat{\gamma}_2 > 1$. From the expression of $\hat{\gamma}_2$ we deduce the condition for $\hat{\gamma}_2 > 1$: $\bar{\theta} < \frac{3r(e_G - e_B) - c(e_G - 2e_B)}{(e_G - 2e_B)(e_G - e_B)}$. This condition is compatible with Assumption 1 if $c < \frac{2r(e_G - e_B)}{e_G - 2e_B}$.

## Appendix B. Proofs of the effects of x and a on prices and demands in a Nash equilibrium

Table B.1 displays the impact of information and awareness campaigns on prices and demand in each market configuration.

<table><caption>**Table B.1**
Effects of x and a on prices and demands.</caption><thead><tr><th>f(x, a)</th><th>∂f(x, a)/∂x</th><th>∂f(x, a)/∂a</th><th>∂²f(x, a)/∂x∂a</th></tr></thead><tbody><tr><td>Fragmentation</td><td></td><td></td><td></td></tr><tr><td>p<sub>B</sub><sup>f</sup></td><td>(e<sub>G</sub> - e<sub>B</sub>) / (2a(x))</td><td>(1 - a(x)) / (2a(x))</td><td>(e<sub>G</sub> - e<sub>B</sub>) / (2a(x))</td></tr><tr><td>d<sub>B</sub><sup>f</sup></td><td>(1/2 + r / (2e<sub>G</sub>)) / (2a(x))</td><td>a(x) / (2e<sub>G</sub>)</td><td>r(x) / (2e<sub>G</sub>)</td></tr><tr><td>p<sub>G</sub><sup>m</sup></td><td>0</td><td>(e<sub>G</sub> - e<sub>B</sub>) / (2a(x))</td><td>0</td></tr><tr><td>d<sub>G</sub><sup>m</sup></td><td>(1/2 - r / (2e<sub>G</sub>)) / (2a(x))</td><td>a(x) / (2e<sub>G</sub>)</td><td>(e<sub>G</sub> - e<sub>B</sub>) / (2a(x))</td></tr></tbody></table>

(continued on next page)
<table><caption>Table B.1 (continued)</caption><thead><tr><th>f(x, a)</th><th>∂f(x, a)/∂x</th><th>∂f(x, a)/∂a</th><th>∂²f(x, a)/∂x∂a</th></tr></thead><tbody><tr><td colspan="4"><strong>Full coverage<br>with corner solution</strong></td></tr><tr><td>P<sup>cc</sup><sub>B</sub></td><td>0</td><td><sup>∂β<sup>'</sup>(a)e<sub>B</sub></sup>&frasl;<sub>2</sub> &lt; 0</td><td>0</td></tr><tr><td>d<sup>cc</sup><sub>B</sub></td><td>(<sup>-1</sup>&frasl;<sub>2</sub> + <sup>c-r</sup>&frasl;<sub>2β<sub>γ</sub>(a)e<sub>G</sub></sub>)α'(x) &lt; 0</td><td><sup>-a(x)(c-r)<sup>'</sup>(a)</sup>&frasl;<sub>2β<sub>γ</sub>(a)<sup>2</sup>e<sub>G</sub></sub> &lt; 0</td><td><sup>-c-r)<sup>'</sup>(a)<sup>2</sup>a'(x)</sup>&frasl;<sub>2β<sub>γ</sub>(a)<sup>2</sup>e<sub>G</sub></sub> &lt; 0</td></tr><tr><td>P<sup>m</sup><sub>G</sub></td><td>0</td><td><sup>∂β<sup>'</sup>(a)e<sub>G</sub></sup>&frasl;<sub>2</sub> &gt; 0</td><td>0</td></tr><tr><td>d<sup>cc</sup><sub>G</sub><br>with interior solution</td><td>(<sup>1</sup>&frasl;<sub>2</sub> - <sup>c-r</sup>&frasl;<sub>2β<sub>γ</sub>(a)e<sub>G</sub></sub>)α'(x) &gt; 0</td><td><sup>a(x)(c-r)<sup>'</sup>(a)</sup>&frasl;<sub>2β<sub>γ</sub>(a)<sup>2</sup>e<sub>G</sub></sub> &gt; 0</td><td><sup>(c-r)<sup>'</sup>(a)<sup>2</sup>a'(x)</sup>&frasl;<sub>2β<sub>γ</sub>(a)<sup>2</sup>e<sub>G</sub></sub> &gt; 0</td></tr><tr><td>P<sup>c</sup><sub>B</sub></td><td><sup>-2β<sub>γ</sub>(a)(e<sub>G</sub>-e<sub>B</sub>)</sup>&frasl;<sub>3a(x)<sup>2</sup></sub>α'(x) &lt; 0</td><td><sup>(2-a(x))β<sub>γ</sub>(a)(e<sub>G</sub>-e<sub>B</sub>)</sup>&frasl;<sub>3a(x)</sub> &gt; 0</td><td><sup>-2β<sub>γ</sub>(a)(e<sub>G</sub>-e<sub>B</sub>)a'(x)</sup>&frasl;<sub>3a(x)<sup>2</sup></sub> &lt; 0</td></tr><tr><td>d<sup>c</sup><sub>B</sub></td><td>(<sup>-1</sup>&frasl;<sub>3</sub> + <sup>c</sup>&frasl;<sub>3β<sub>γ</sub>(a)e<sub>G</sub>-e<sub>B</sub></sub>)α'(x)</td><td><sup>-a(x)<sup>'</sup>(a)c</sup>&frasl;<sub>3β<sub>γ</sub>(a)<sup>2</sup>(e<sub>G</sub>-e<sub>B</sub>)</sub> &lt; 0</td><td><sup>-cγ'(a)<sup>'</sup>a'(x)</sup>&frasl;<sub>3β<sub>γ</sub>(a)<sup>2</sup>(e<sub>G</sub>-e<sub>B</sub>)</sub> &lt; 0</td></tr><tr><td>P<sup>G</sup></td><td><sup>-∂β<sub>γ</sub>(a)(e<sub>G</sub>-e<sub>B</sub>)</sup>&frasl;<sub>3a(x)<sup>2</sup></sub>α'(x) &lt; 0</td><td>(1+a(x))β<sub>γ</sub>(a)(e<sub>G</sub>-e<sub>B</sub>) &gt; 0</td><td><sup>-∂β<sub>γ</sub>(a)(e<sub>G</sub>-e<sub>B</sub>)a'(x)</sup>&frasl;<sub>3a(x)<sup>2</sup></sub> &lt; 0</td></tr><tr><td>d<sup>G</sup></td><td>(<sup>1</sup>&frasl;<sub>3</sub> - <sup>c</sup>&frasl;<sub>3β<sub>γ</sub>(a)e<sub>G</sub>-e<sub>B</sub></sub>)α'(x)</td><td><sup>a(x)<sup>'</sup>(a)c</sup>&frasl;<sub>3β<sub>γ</sub>(a)<sup>2</sup>(e<sub>G</sub>-e<sub>B</sub>)</sub> &gt; 0</td><td><sup>cγ'(a)<sup>'</sup>a'(x)</sup>&frasl;<sub>3β<sub>γ</sub>(a)<sup>2</sup>(e<sub>G</sub>-e<sub>B</sub>)</sub> &gt; 0</td></tr></tbody></table>

## Appendix C. Proofs of optimal campaigns

Table C.1 summarizes the effects of information and awareness-raising campaigns on environmental quality in each market configuration.

<table><caption>Table C.1
Effects of x and a on environmental quality.</caption><thead><tr><th>E(x, a)</th><th>E<sub>x</sub> = ∂E(x, a)/∂x</th><th>E<sub>a</sub> = ∂E(x, a)/∂a</th></tr></thead><tbody><tr><td>E<sup>s</sup></td><td><sup>a'(x)</sup>&frasl;<sub>2</sub> (e&#773; + e<sub>G</sub> - 2e<sub>B</sub> + <sup>(c-r)(e&#773;-e<sub>G</sub>)</sup>&frasl;<sub>β<sub>γ</sub>(a)e<sub>G</sub></sub>)</td><td>-α(x) <sup>(c-r)(e&#773;-e<sub>G</sub>)γ'(a)</sup>&frasl;<sub>2β<sub>γ</sub>(a)<sup>2</sup>e<sub>G</sub></sub></td></tr><tr><td>E<sup>f</sup></td><td><sup>a'(x)</sup>&frasl;<sub>2</sub> (e<sub>G</sub> - e<sub>B</sub> + <sup>r&#773;(e<sub>G</sub>-e<sub>B</sub>) + cc<sub>B</sub>(e&#773;-e<sub>G</sub>)</sup>&frasl;<sub>β<sub>γ</sub>(a)e<sub>G</sub></sub>)</td><td>α(x) <sup>(r&#773;(e<sub>G</sub>-e<sub>B</sub>) + cc<sub>B</sub>(e&#773;-e<sub>G</sub>))γ'(a)</sup>&frasl;<sub>-2β<sub>γ</sub>(a)<sup>2</sup>e<sub>G</sub></sub></td></tr><tr><td>E<sup>cc</sup></td><td><sup>a'(x)e<sub>G</sub>-e<sub>B</sub> + r&#773;(e<sub>G</sub>-e<sub>B</sub>)γ'(a)</sup>&frasl;<sub>2β<sub>γ</sub>(a)e<sub>G</sub></sub></td><td>α(x) <sup>(e<sub>G</sub>-e<sub>B</sub>)(c-r)γ'(a)</sup>&frasl;<sub>2β<sub>γ</sub>(a)<sup>2</sup>e<sub>G</sub></sub></td></tr><tr><td>E<sup>e</sup></td><td><sup>a'(x)</sup>&frasl;<sub>3</sub> (e<sub>G</sub> - e<sub>B</sub> - <sup>c</sup>&frasl;<sub>β<sub>γ</sub>(a)</sub>)</td><td>α(x) <sup>cγ'(a)</sup>&frasl;<sub>3β<sub>γ</sub>(a)<sup>2</sup></sub></td></tr></tbody></table>

Because environmental quality $E(x, a)$ is a piecewise linear function of $x$ and $a$, with $\alpha(x) \in [0, 1]$ and $\gamma(a) \in [1, \bar{\gamma}]$, defined by the conditions on $\alpha(x)$ and $\gamma(a)$ for the different market configurations, we derive the optimal information and awareness-raising campaigns by solving $\max_a \{\max_x E(x, a)\}$ subject to $w_x x + w_a a \le R$. We thus proceed in two steps: (1) we determine $x^*$ that maximizes $E(x, a)$ for a given $a$, and (2) we derive $a^*$ that maximizes $E(x^*, a)$ under the budget constraint $w_x x^* + w_a a \le R$.

### Maximization of $E(x, a)$ for a given $a$

The analysis in Section 5 shows that $E(x, a)$ reaches its maximum for a fraction $\alpha(x)$ of informed consumers equal to either $\hat{a}_0(a)$ or $\min(\hat{a}_2(a), 1)$. Therefore, denoting $\hat{x}_i(a)$ as the information campaign that leads to $\alpha(\hat{x}_i(a)) = \hat{a}_i(a)$ and $\bar{x}$ such that $\alpha(\bar{x}) = 1$, we compare $E^s(\hat{x}_0(a), a)$ with $E^f(\bar{x}, a)$ and $E^{cc}(\min(\hat{x}_2(a), \bar{x}), a)$ to characterize the conditions for each optimal $x$. We define the key environmental quality levels as follows:

$$ 
\begin{aligned}
E^s(\hat{x}_0(a), a) &= \frac{e_B \left( r(\bar{e} + e_G) - c(\bar{e} - e_G) - \bar{\theta} \gamma(a)(\bar{e} + e_G)e_G \right)}{2(r - \bar{\theta} \gamma(a)e_B)e_G} \\
E^f(\bar{x}, a) &= \frac{r\bar{e}(e_G - e_B) + c e_B(\bar{e} - e_G) + \bar{\theta} \gamma(a)(\bar{e} + e_G)e_G e_B}{2\bar{\theta} \gamma(a)e_G e_B} \\
E^{cc}(\hat{x}_2(a), a) &= \frac{N}{2e_G (3r(e_G - e_B) - c(e_G - 2e_B) + \bar{\theta} \gamma(a)(e_G - e_B)(e_G + e_B))} \\
&\quad \text{with } N = r(e_G - e_B)(e_G + e_B)(2e_G + e_B) - c(2e_G^3 - 3e_B e_G^2 - e_B^3) + e_G(e_G - e_B)(2e_G^3 - e_B e_G + 3e_B^2)\bar{\theta} \gamma(a) \\
E^{cc}(\bar{x}, a) &= \frac{1}{2} \left( e_G + e_B - \frac{(c-r)(e_G - e_B)}{\bar{\theta} \gamma(a)e_G} \right)
\end{aligned}
$$
<figure><img src="image_10.png" /><figcaption>Fig. C.1. Thresholds for $\bar{\theta}\gamma(a)$ according to $e_B$.</figcaption></figure>

We deduce that $E^s(\hat{x}_0(a), a) \le E^f(\bar{x}, a)$ if $\gamma(a) \ge \hat{\gamma}_3$, a condition that ensures that $E_x^f(x, a) \ge 0$ and prevents a covered market (because $\hat{\gamma}_3 > \hat{\gamma}_1$). However, using the expressions in Table C.1, we can prove that $E_x^s(x, a) > E_x^f(x, a)$. Therefore, $x$ is a more effective tool in a segmented market than in a fragmented market. As a result, even if $E^s(\hat{x}_0(a), a) \le E^f(\bar{x}, a)$ for a given $a$, there exists $a' > a$ such that $E^s(\hat{x}_0(a'), a') \ge E^f(\bar{x}, a)$. Consequently, if $\gamma(a) \ge \hat{\gamma}_3$, the information campaign that maximizes environmental quality is either $\hat{x}_0(a')$ or $\bar{x}$ for given $a$ and $a'$.

Moreover, if $\gamma(a) \le \hat{\gamma}_1$, the market is covered when $a(x) \ge \hat{a}_1(a)$ and the environmental quality-level equations show that the value of $a$, such that $E^s(\hat{x}_0(a), a) = E^{cc}(\hat{x}_2(a), a)$, corresponds to a real root of a second-degree polynomial in $\bar{\theta}\gamma(a)$. We can show that this polynomial has two real roots, only one of which is greater than $\bar{\theta}$. We denote this root as $\bar{\theta}\hat{\gamma}_4$ (whose expression is of no interest) and deduce that $E^s(\hat{x}_0(a), a) \ge E^{cc}(\hat{x}_2(a), a)$ if $\bar{\theta}\gamma(a) \le \bar{\theta}\hat{\gamma}_4$. A similar reasoning applies to $E^s(a_0(a), a) = E^{cc}(\bar{x}, a)$. We can show that $E^s(\hat{x}_0(a), a) \ge E^{cc}(\bar{x}, a)$ if $\bar{\theta}\gamma(a)$ is higher than a threshold, denoted $\bar{\theta}\hat{\gamma}_5 \ge \bar{\theta}\hat{\gamma}_4$.

To sum up, for a given $a$, the environmental NGO's best campaign is:

1. if $\gamma(a) \ge \hat{\gamma}_3$, to inform $\hat{a}_0(a)$ consumers with an information campaign $\hat{x}_0(a)$ keeping the market segmented or to inform all consumers with an information campaign $\bar{x}$ leading to a fragmented market;

2. if $\gamma(a) < \hat{\gamma}_3$ and $\gamma(a) \notin [\hat{\gamma}_4, \hat{\gamma}_5]$, to inform $\hat{a}_0(a)$ consumers with an information campaign $\hat{x}_0(a)$ keeping the market segmented;

3. if $\gamma(a) < \hat{\gamma}_3$ and $\gamma(a) \in [\hat{\gamma}_2, \hat{\gamma}_5]$, to inform all consumers with an information campaign $\bar{x}$ leading the market to be covered with an interior solution.

4. if $\gamma(a) < \hat{\gamma}_3$ and $\gamma(a) \in [\hat{\gamma}_2, \hat{\gamma}_5]$, to inform $\hat{a}_2(a)$ consumers with an information campaign $\hat{x}_2(a)$ leading the market to be covered with a corner solution;

Because the thresholds $\hat{\gamma}_i$, with $i = \{1, \dots, 5\}$, depend on the aversion effects $e_B$, we illustrate the results with Fig. C.1; it shows the thresholds for $\bar{\theta}\gamma(a)$ as a function of $e_B$, and the regions where the NGO chooses to inform $\hat{a}_0(a)$, $\hat{a}_2(a)$ or all consumers, by setting $\bar{e} = 2$, $e_G = 1$, $r = 3$, and $c = 4$.

### Maximization of $E(x^*, a)$ under the budget constraint

The analysis of $E^k(x, a)$ in Section 5 also shows that $E^k(x, a)$ is an increasing function of $a$ for a given $x$ in all market configurations, except a segmented market. In addition, given its information strategies $\hat{x}_0(a)$, $\hat{x}_2(a)$, and $\bar{x}$, the NGO chooses the awareness-raising strategy $a$ that maximizes $E^s(\hat{x}_0(a), a)$, $E^{cc}(\hat{x}_2(a), a)$ and $E^c(\bar{x}, a)$ which are increasing functions of $a$. Therefore, the optimal awareness-raising campaign is to increase $a$ as much as the budget constraint allows. The optimal information and awareness-raising campaigns are then

1. $(\hat{x}_0(a^*), a^*)$, with $w_x\hat{x}_0(a^*) + w_a a^* = R$ if $\gamma(a^*) \le \hat{\gamma}_3$, and $\gamma(a^*) \notin [\hat{\gamma}_4, \hat{\gamma}_5]$ (i.e., the white area in Fig. C.1): this case arises when $R$ is low, which forces $\gamma(a)$ to remain below $\hat{\gamma}_3$. The stronger the aversion effect ($-e_B$), the stronger the budget constraint (i.e., the lower $\hat{\gamma}_3$);

2. $(\hat{x}_0(a^*), a^*)$, with $w_x\hat{x}_0(a^*) + w_a a^* = R$ if $\gamma(a^*) > \hat{\gamma}_3$, and $E^s(\hat{x}_0(a^*), a^*) > E^f(\bar{x}, a^{**})$, with $a^{**} < a^*$ and $w_x\bar{x} + w_a a^{**} = R$ (i.e., the gray area on the northwest side of Fig. C.1): this case arises when $R$ is high enough to allow $\gamma(a)$ to exceed $\hat{\gamma}_3$, and when $a$ is a more effective strategy than $x$ (i.e., $w_a/w_x$ is relatively low). The stronger the aversion effect ($-e_B$), the lower the minimum budget required for this case (i.e., the lower $\hat{\gamma}_3$);

3. $(\bar{x}, a^{**})$, with $w_x\bar{x} + w_a a^{**} = R$ if $\gamma(a^{**}) > \hat{\gamma}_3$, and $E^f(\bar{x}, a^{**}) > E^s(\hat{x}_0(a^*), a^*)$, with $a^{**} < a^*$ and $w_x\hat{x}_0(a^*) + w_a a^* = R$: this case arises when $R$ is high enough to allow $\gamma(a)$ to exceed $\hat{\gamma}_3$, and when $x$ is a more effective strategy than $a$ (i.e., $w_a/w_x$ is relatively high); and
4. $(\min(\hat{x}_2(a^*), \bar{x}), a^*)$, with $w_x \min(\hat{x}_2(a^*), \bar{x}) + w_a a^* = R$ when $\gamma(a^*) \in [\hat{\gamma}_4, \hat{\gamma}_5]$ (i.e., the gray area on the right-hand side of Fig. C.1): this case occurs only when $e_B$ is close to 0 and the market is covered for a small fraction $\alpha(x)$, because $\hat{\alpha}_0(a)$ and $\hat{\alpha}_1(a)$ tend toward 0. Moreover, $\hat{\alpha}_2(a)$ tends toward $2\bar{\theta}\gamma(a)e_G/(3r - c + \bar{\theta}\gamma(a))$, which is higher than 1 if $\bar{\theta}\gamma(a) > (3r - c)/e_G$.

## Appendix D. Effects of the campaigns on social welfare

Table D.1 summarizes the effects of the information and awareness-raising campaigns on the welfare components in all possible market configurations, where CoS means “corner solution,” and InS means “interior solution,” and the symbol $\pm$ means that the effect of the variable can be positive or negative depending on certain conditions on the parameters of the model. As we have already detailed the effects of the campaigns on profits and environmental quality previously, we analyze only their effects on consumer surplus here.

<table><caption>**Table D.1**
Effects of x and a on welfare components.</caption><thead><tr><th rowspan="2">W</th><th colspan="2">Segmentation</th><th colspan="2">Fragmentation</th><th colspan="2">Coverage CoS</th><th colspan="2">Coverage InS</th></tr><tr><th>x</th><th>a</th><th>x</th><th>a</th><th>x</th><th>a</th><th>x</th><th>a</th></tr></thead><tbody><tr><td>CS<sub>U</sub></td><td>0</td><td>0</td><td>+</td><td>-</td><td>0</td><td>+</td><td>±</td><td>-</td></tr><tr><td>CS<sub>B1</sub></td><td>/</td><td>/</td><td>+</td><td>-</td><td>0</td><td>+</td><td>±</td><td>±</td></tr><tr><td>CS<sub>G1</sub></td><td>0</td><td>+</td><td>0</td><td>+</td><td>0</td><td>+</td><td>±</td><td>±</td></tr><tr><td>CS</td><td>+</td><td>+</td><td>±</td><td>±</td><td>±</td><td>+</td><td>±</td><td>-</td></tr><tr><td>π<sub>B</sub></td><td>-</td><td>0</td><td>-</td><td>-</td><td>-</td><td>-</td><td>-</td><td>+</td></tr><tr><td>π<sub>G</sub></td><td>+</td><td>+</td><td>+</td><td>+</td><td>+</td><td>+</td><td>-</td><td>+</td></tr><tr><td>δ E</td><td>+</td><td>-</td><td>±</td><td>+</td><td>±</td><td>+</td><td>±</td><td>+</td></tr><tr><td>-α(x, a)</td><td>-</td><td>-</td><td>-</td><td>-</td><td>-</td><td>-</td><td>-</td><td>-</td></tr></tbody></table>

Depending on the market configuration of the Nash equilibrium, we define the resulting surplus of uninformed and informed consumers as follows:

$$CS_U^s = 0, \qquad (D.1)$$

$$CS_I^s = \frac{(r - c + \bar{\theta}\gamma(a)e_G)^2}{8\bar{\theta}\gamma(a)e_G}, \qquad (D.2)$$

$$CS_U^f = \frac{r}{2} + \frac{(1 - \alpha(x))\bar{\theta}\gamma(a)e_B}{2\alpha(x)}, \qquad (D.3)$$

$$CS_I^f = \frac{(\alpha(x)r + (1 - \alpha(x))\bar{\theta}\gamma(a)e_B)^2}{-8\alpha(x)^2\bar{\theta}\gamma(a)e_B} + \frac{(r + \bar{\theta}\gamma(a)e_G - c)^2}{8\bar{\theta}\gamma(a)e_G}, \qquad (D.4)$$

$$CS_U^{cc} = \frac{-e_B(c - r + \bar{\theta}\gamma(a)e_G)}{2e_G}, \qquad (D.5)$$

$$CS_I^{cc} = \frac{-e_B(-r + \bar{\theta}\gamma(a)e_G + c)^2}{8\bar{\theta}\gamma(a)e_G^2} + \frac{(r + \bar{\theta}\gamma(a)e_G - c)^2}{8\bar{\theta}\gamma(a)e_G}, \qquad (D.6)$$

$$CS_U^c = \frac{(1 - \alpha(x))(-\alpha(x)(c - 3r) - (2 - \alpha(x))\bar{\theta}\gamma(a)(e_G - e_B))}{3\alpha(x)}, \qquad (D.7)$$

$$CS_I^c = r + \frac{((7e_G + 2e_B)\alpha(x)^2 - 10(e_G - e_B)\alpha(x) + e_G - e_B)\bar{\theta}\gamma(a)}{18\alpha(x)^2} - \frac{2(4\alpha(x) + 1)c}{\alpha(x)} + \frac{c^2}{\bar{\theta}\gamma(a)(e_G - e_B)}, \qquad (D.8)$$

where the first term in the equations characterizing $CS_I^f$ and $CS_I^{cc}$ corresponds to the surplus of the informed consumers who consume the brown product and the second term corresponds to the surplus of the informed consumers who consume the green product. Next are demonstration elements in the case when the effects of x and a on surpluses are ambiguous.

In the case of fragmentation, using Eqs. (D.3) and (D.4), we can define the total consumer surplus as

$$CS^f = \frac{r - \alpha(x)c}{4} + \frac{\alpha(x)(- (e_G - e_B)r^2 - 2ce_B r + c^2 e_B)}{8\bar{\theta}\gamma(a)e_G e_B} + \frac{\bar{\theta}\gamma(a)(\alpha(x)^2e_G + 3(1 - \alpha(x))^2e_B)}{8\alpha(x)}.$$
The derivatives of the consumer surplus with respect to x and a are

$$ 
\begin{aligned}
\frac{\partial CS^f}{\partial x} &= \left( \frac{-c}{4} + \frac{-r^2 e_G + (c-r)^2 e_B}{8 \bar{\theta} \gamma(a) e_G e_B} + \left( e_G - 3e_B \frac{1-\alpha(x)^2}{\alpha(x)^2} \right) \bar{\theta} \gamma(a) \right) \alpha'(x), \\
\frac{\partial CS^f}{\partial a} &= \frac{\gamma'(a)}{8\alpha(x)\bar{\theta}} \left( 3(1-\alpha(x))^2 \bar{\theta}^2 e_B + \alpha(x)^2 \bar{\theta}^2 e_G + \frac{\alpha(x)^2 (r^2 e_G - (c-r)^2 e_B)}{\gamma(a)^2 e_G e_B} \right).
\end{aligned}
$$

As the second and third terms within the parentheses of $\partial CS^f / \partial x$ are positive, the consumer surplus is an increasing function of x as soon as the (negative) first term, and thus the unit cost of production c, is sufficiently low (within the bounds defined by Assumption 2). As the first and third terms of $\partial CS^f / \partial a$ are negative, the consumer surplus is a decreasing function of a as soon as the (positive) second term is sufficiently low. Nevertheless, the conditions on $\alpha(x)$ and $\gamma(a)$ and the four parameters of the model for the consumer surplus to be a decreasing or increasing function of x and a are difficult to detail.

In the case of a covered market with a corner solution, the condition for the total surplus to be an increasing function of x is $CS_U^{cc} < CS_I^{cc}$, which can be written as a second-degree polynomial in $z \equiv \bar{\theta}\gamma(a)e_G$:

$$ P(z) = (e_G + 3e_B)z^2 - 2(e_G - e_B)(c - r)z + (e_G - e_B)(c - r)^2 > 0, $$

whose discriminant $\Delta = -16(c-r)^2(e_G - e_B)e_B$ is positive. The polynomial thus has two real roots, defined as $z_i = ((c-r)(e_G - e_B) \pm (c-r)\sqrt{(e_G - e_B)e_B}) / (e_G + 3e_B)$, both of which are positive if $e_G + 3e_B > 0$ or only one of which is positive if $e_G + 3e_B < 0$. In both cases, $P(z) > 0$ if $z < z_1$, which we can rewrite as

$$ 0 < \bar{\theta}\gamma(a)e_G < \frac{(c-r)(e_G - e_B - \sqrt{-e_B(e_G - e_B)})}{3e_B + e_G}. $$

In the case of a covered market with an interior solution, the condition for the surplus of uninformed consumers to be an increasing function of x is

$$ (c - 3r)\alpha(x)^2 + (e_G - e_B)(2 - \alpha(x)^2)\bar{\theta}\gamma(a) > 0, $$

and the condition for the surplus of informed consumers to be an increasing function of x is

$$ \alpha(x)c - (e_G - e_B)(1 - 5\alpha(x))\bar{\theta}\gamma(a) > 0. $$

The condition for the total surplus is then

$$ \frac{\partial CS^c}{\partial x} = \frac{\alpha'(x)}{18} \left( 4c(1-3r) - 18r(1-2\alpha(x)) + \frac{c^2}{(e_G - e_B)\bar{\theta}\gamma(a)} + \frac{(12(e_G - e_B)\alpha(x)^3 - (17e_G - 26e_B)\alpha(x)^2 + 11(e_G - e_B))\bar{\theta}\gamma(a)}{\alpha(x)^2} \right) > 0. $$

The conditions on $\alpha(x)$ and $\gamma(a)$ and the four parameters of the model for the consumer surplus to be a decreasing or increasing function of x are thus difficult to detail. However, the surplus of uninformed and informed consumers (i.e., the total surplus) is unambiguously decreasing in a:

$$ \frac{\partial CS^c}{\partial a} = \frac{\gamma'(a)}{18\alpha(x)\bar{\theta}} \left( \left( (11 - 2(1 - \alpha(x))(10 - 3\alpha(x))\alpha(x))e_B - (11 - 20\alpha(x) + 17\alpha(x)^2 - 6\alpha(x)^3)e_G \right) \bar{\theta}^2 - \frac{\alpha(x)^2 c^2}{\gamma(a)^2 (e_G e_B)} \right) < 0. $$

Table D.2 presents a numerical application of the effects of optimal information and awareness-raising campaigns ($x^*$ and $a^*$) on welfare component levels when $e_G = 1$, $r = 3$, and $c = 4$. The aversion effect is either low ($e_B = -1/2$) or high ($e_B = -2$), and the budget constraint (i.e., $w_x x + w_a a \le R = w_x x^* + w_a a$) implies that the maximum value of $\bar{\theta}\gamma(\bar{a})$ is 4 or 8. The “Before” columns show the welfare component values before the campaigns assuming 10 % of consumers are already informed. Table D.2 reads as follows: Before the campaigns, if $e_B = -1/2$, 10 % of consumers are informed ($\alpha(x) = 0.1$), and none are sensitized ($\bar{\theta}\gamma(a) = 1$), then environmental quality is $E = -0.25$, the consumer surplus is $CS = 0$, the total profit is $\Pi = 2.7$ and the economic welfare is $CS + \Pi = 2.7$. After the campaigns, if $R$ is such that $\bar{\theta}\gamma(a) \le 4$, then the NGO will inform 40 % of consumers ($\alpha(x^*) = 0.4$) and spend its entire remaining budget on the awareness raising campaign ($\bar{\theta}\gamma(a^*) = 4$). These campaigns lead to environmental quality of $E = 0.350$, consumer surplus of $CS = 0.112$, total profit of $\Pi = 2.025$, and economic welfare of $CS + \Pi = 2.598$. Similar readings apply to the other columns (i.e., $e_B = -1/2$ and $\bar{\theta}\gamma(a) \le 8$, or $e_B = -2$ and no campaign, or $e_B = -2$ and $\bar{\theta}\gamma(a) \le 4$, or $e_B = -2$ and $\bar{\theta}\gamma(a) \le 8$).

To highlight the contrasting effects of information and awareness-raising campaigns on environmental quality, consumer surplus and profits, Table D.3 shows the campaigns that maximize each welfare component and the economic welfare. Table D.3 reads as follows: if $e_B = -1/2$ and $\bar{\theta}\gamma(a) \le 4$, then the maximum environmental quality, equal to 0.350 (column “Max”), is reached for $\alpha(x) = 0.4$ and $\bar{\theta}\gamma(a) = 4$ (as in Table D.2), the maximum consumer surplus, equal to 0.787, is reached for $\alpha(x) = 0.8$ and $\bar{\theta}\gamma(a) = 4$, the maximum total profit, equal to 3, is reached for $\alpha(x) = 0$ and $\bar{\theta}\gamma(a) = 1.099$. Similar readings apply to the other columns (i.e., $e_B = -1/2$ and $\bar{\theta}\gamma(a) \le 8$, or $e_B = -2$ and $\bar{\theta}\gamma(a) \le 4$, or $e_B = -2$ and $\bar{\theta}\gamma(a) \le 8$).
<table><caption>**Table D.2**
Numerical effects of $x^*$ and $a^*$ on welfare components.</caption><thead><tr><th rowspan="2">Aversion effect<br>Campaigns</th><th colspan="3">$e_B = -1/2$</th><th colspan="3">$e_B = -2$</th></tr><tr><th>Before</th><th>After</th><th></th><th>Before</th><th>After</th><th></th></tr></thead><tbody><tr><td>$\bar{\theta}_{\gamma}(a^*)$</td><td>1</td><td>4</td><td>8</td><td>1</td><td>4</td><td>8</td></tr><tr><td>$\alpha(x^*)$</td><td>0.1</td><td>0.40</td><td>0.57</td><td>0.1</td><td>1</td><td>1</td></tr><tr><td>Welfare components</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>$E$</td><td>-0.25</td><td>0.350</td><td>0.679</td><td>-1.6</td><td>0.875</td><td>1.187</td></tr><tr><td>$CS$</td><td>0</td><td>0.112</td><td>0.437</td><td>0</td><td>0.422</td><td>0.836</td></tr><tr><td>$\Pi$</td><td>2.7</td><td>2.025</td><td>2.161</td><td>2.7</td><td>0.844</td><td>1.672</td></tr><tr><td>$CS + \Pi$</td><td>2.7</td><td>2.137</td><td>2.598</td><td>2.7</td><td>1.266</td><td>2.508</td></tr></tbody></table>

<table><caption>**Table D.3**
Campaigns maximizing welfare components.</caption><thead><tr><th rowspan="3">$e_B$<br>$\bar{\theta}_\gamma(\bar{a})$</th><th colspan="6">$-1/2$</th><th colspan="6">$-2$</th></tr><tr><th colspan="3">4</th><th colspan="3">8</th><th colspan="3">4</th><th colspan="3">8</th></tr><tr><th>Max</th><th>$\alpha(x)$</th><th>$\bar{\theta}_\gamma(a)$</th><th>Max</th><th>$\alpha(x)$</th><th>$\bar{\theta}_\gamma(a)$</th><th>Max</th><th>$\alpha(x)$</th><th>$\bar{\theta}_\gamma(a)$</th><th>Max</th><th>$\alpha(x)$</th><th>$\bar{\theta}_\gamma(a)$</th></tr></thead><tbody><tr><td>$E$</td><td>0.350</td><td>0.4</td><td>4</td><td>0.679</td><td>0.57</td><td>8</td><td>0.875</td><td>1</td><td>4</td><td>1.187</td><td>1</td><td>8</td></tr><tr><td>$CS$</td><td>0.787</td><td>0.8</td><td>4</td><td>1.047</td><td>1</td><td>8</td><td>0.430</td><td>0.949</td><td>4</td><td>0.836</td><td>1</td><td>8</td></tr><tr><td>$\Pi$</td><td>3</td><td>0</td><td>1.099</td><td>3</td><td>0</td><td>1.099</td><td>3</td><td>0</td><td>1.099</td><td>3</td><td>0</td><td>1.099</td></tr><tr><td>$CS + \Pi$</td><td>3</td><td>0</td><td>1.004</td><td>3.141</td><td>1</td><td>8</td><td>3</td><td>0</td><td>1.099</td><td>2.508</td><td>1</td><td>8</td></tr></tbody></table>

## Appendix E. Effects of a warm-glow utility of abstention

Under the assumption that consuming nothing provides utility $U_A = \bar{\theta}_\gamma(a)\bar{e}$ for informed consumers, the segmented market cannot exist. For uninformed consumers to consume $B$, $p_B \le r$ must be true, while for informed consumers not to consume $B$, $p_B \ge r$ must be true in order to obtain $\Theta_B < 0$, which is contradictory.

The conditions for the existence of an uncovered market (with the most sensitive informed consumers not consuming) are $0 < \Theta_{BG} \le \Theta_B$ and $0 < \Theta_{BG} < \Theta_G < \bar{\theta}_\gamma(a)$, with the indifferent consumers characterized by:

$$ \Theta_B^{Au} = \frac{(3r-c)\alpha(x) + 2(e_G - e_B)(1 - \alpha(x))\bar{\theta}_\gamma(a)}{(3\bar{e} + e_G - 4e_B)\alpha(x)} $$

$$ \Theta_G^{Au} = \frac{((3\bar{e} + e_G - 2e_B)r - 2c(\bar{e} - e_B))\alpha(x) + (e_G - e_B)(\bar{e} - e_G)(1 - \alpha(x))\bar{\theta}_\gamma(a)}{(\bar{e} - e_G)(3\bar{e} + e_G - 4e_B)\alpha(x)} $$

$$ \Theta_{BG}^{Au} = \frac{(c(\bar{e} - e_B) + (e_G - e_B)r)\alpha(x) - (e_G - e_B)(\bar{e} + e_G - 2e_B)(1 - \alpha(x))\bar{\theta}_\gamma(a)}{(e_G - e_B)(3\bar{e} + e_G - 4e_B)\alpha(x)} $$

In that case, $\Theta_B^{Au} > 0$ requires $0 < \alpha < \alpha_0^A$, $\Theta_{BG}^{Au} > 0$ requires $\alpha > \alpha_0^A$ and $\Theta_{BG}^{Au} < \Theta_G^{Au}$ requires $\alpha < \alpha_{000}^A$ with:

$$ \alpha_0^A = \frac{2(e_G - e_B)\bar{\theta}_\gamma(a)}{(3r - c) + 2(e_G - e_B)\bar{\theta}_\gamma(a)} $$

$$ \alpha_{00}^A = \frac{(e_G - e_B)(\bar{e} + e_G - 2e_B)\bar{\theta}_\gamma(a)}{(c(\bar{e} - e_B) + (e_G - e_B)r) + (e_G - e_B)(\bar{e} + e_G - 2e_B)} $$

$$ \alpha_{000}^A = \frac{(e_G - e_B)(\bar{e} - e_G)((\bar{e} - e_B)\bar{\theta}_\gamma(a)}{c(\bar{e} - e_B)(\bar{e} + e_G - 2e_B) - 2r(e_G - e_B)(\bar{e} + e_G - e_B) + (e_G - e_B)(\bar{e} - e_G)((\bar{e} - e_B)} $$

Because $\alpha_{000}^A < \alpha_0^A$, these conditions are incompatible and the market cannot be uncovered.

The only possibility is therefore that either Product B or Product G is only being offered by one firm left in the market. However, a monopoly G would price at $p_G^{Am}$:

$$ p_G^m = \frac{(c + r)\alpha(x) + (\bar{e} - e_G)\bar{\theta}(1 - \alpha(x))\gamma(a)}{2\alpha(x)} $$

Because $c > r$, $p_G^{Am} > r$ which prevents Firm G from serving the entire market.
As a result, the market is served by a monopoly B pricing at $p_B^{Am}$ with demand $d_B^{Am}$:

$$p_B^{Am} = \frac{r\alpha(x) + (\bar{e} - e_G)\bar{\theta}(1 - \alpha(x))\gamma(a)}{2\alpha(x)} < r$$

$$d_B^{Am} = \frac{1}{2} \left( 1 - \alpha(x) \left( 1 - \frac{r}{(\bar{e} - e_B)\bar{\theta}\gamma(a)} \right) \right) \\ \Rightarrow \frac{\partial d_B^{Am}}{\partial x} > 0 \text{ and } \frac{\partial d_B^{Am}}{\partial a} < 0$$

The most environmentally conscious consumers refrain from consuming.

## Data availability

No data were used for the research described in the article.

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