Consumer Environmental Awareness in a Green Managerial Delegation Contract Under Common Ownership

ABSTRACT

This study examines consumers' environmental awareness (CEA) in a green managerial delegation contract with environmental incentives under common ownership. We find that higher CEA increases environmental incentives, while an increase of common ownership may reduce environmental incentives if CEA is high enough. We also demonstrate that an increase of common ownership is profitable to the industry through environmental incentives only when both CEA and common ownership are small enough, but a higher CEA can reduce the industry‐wide profitable level of common ownership. Our analysis reveals that the government should monitor the higher level of common ownership and induce higher environmental incentives as CEA increases.