Customers who care about the environment are willing to pay a premium for products that support their values. When selecting a burger off a menu, these consumers will pay more for the alternative meat product, knowing it uses far less water and land to produce. But some will only consider the meatless burger if it’s cheaper than the meat version—while others reject it entirely as inferior.
So how should companies decide whether to invest in sustainable lines of products—like plant-based meats, cold-water detergents, or recycled-fabric clothing? And if they do, how would that impact prices and profits?
A new study by Wilfred Amaldoss, the Thomas A. Finch Jr. Distinguished Professor of Marketing at Duke University’s Fuqua School of Business, coauthored with Fuqua PhD Siddharth Prusty, shows that consumer reactions to sustainability can be far more divided and strategically complicated than firms might assume.
The paper “Sustainable Consumption: A Strategic Analysis,” published in Marketing Science, found that when consumers preference for sustainable products grows, companies may actually face lower prices and profits; on the other hand, when consumers dislike for sustainable goods rises, firms may earn more by scaling back their green investments. The findings challenge the notion that sustainability always benefits both business and society.
“You may think that if people value sustainability, everyone wins,” Amaldoss said. “But when consumers differ sharply in their attitudes, the outcome can surprise you.”
In the United States, sales of sustainable consumer products have increased from $88 billion in 2013 to $114 billion in 2018, and demand is growing. This trend has prompted products like sustainable laundry detergents, eco-friendly apparel, and responsibly sourced paper towels.
To gain a deeper understanding of the market for sustainable products, Amaldoss and Prusty began their study with a survey of more than 500 U.S. consumers, testing their views across six product categories—burgers, laundry detergents, coffee, paper towels, fleece jackets, and trash bags.
Their goal was to study customer attitudes around two dimensions:
Among those who disliked the sustainable options, some viewed—for example—plant-based burgers as overly processed or less tasty. Others doubted that cold-water detergents could clean as thoroughly as traditional ones.
“Some consumers see sustainable products as higher quality,” Amaldoss said. “Others view them as compromises—associating ‘green’ with lower quality.”
Building on these findings, the researchers developed a game-theoretic model to study how firms compete when some customers desire sustainable goods—and are willing to pay more for them—and others dislike them.
The results overturned some common assumptions. If more consumers prefer sustainable products, you might expect firms to raise prices and earn more profits. But the model showed the opposite can happen: prices and profits may fall. Competing firms, eager to appeal to green consumers, race to outdo each other on sustainability and spend more on product development, raising their costs. They also compete on price, to appeal to consumers who view sustainable products to be of lower quality.
“Companies can get caught in a kind of arms race,” Amaldoss said. “They invest heavily in sustainability to please one group of customers, but the costs rise faster than the rewards.”
Surprisingly, profits may instead rise when some consumers’ dislike for sustainable products grows. As skeptics push back, firms ease off on costly sustainability improvements—saving money even when they lower prices slightly.
“Obviously, when they scale back their green investments to save costs—achieving higher profits—they simultaneously reduce their sustainable investment, resulting in fewer environmental benefits,” Amaldoss said.
Also Read: Beyond Trade-offs: Importance of making sustainability aspirational and profitable
Some governments have begun setting minimal sustainability standards, requiring companies to meet specific environmental thresholds. The European Union, for instance, has proposed rules regarding recyclability and energy performance for everything from food and electronics to detergents.
Amaldoss and Prusty’s model suggests these regulations don’t always have the intended effect. If higher standards reduce the appeal of products for skeptics, some consumers will stop buying those products entirely, leaving both firms and overall buyers worse off. The sustainability-minded consumers will enjoy higher standards, but skeptics in the market will stop buying.
“Regulators want to do good,” Amaldoss said, “but if they don’t account for differences in consumer attitudes, their policies can hurt both consumers and firms.”
The research found that more targeted policies—like firm-level average sustainability goals rather than product-level mandates—can work better.
For example, they could require companies to balance the percentages of sustainable and conventional products within each product line—say, requiring a certain percentage of plant-based burgers within the burger category. This solution, Amaldoss said, could be a win for everybody.
“Consumers will be happy, companies will make more money, and the government will also address environmental needs without having to compromise,” Amaldoss said.
He also cautioned that without government regulation, firms may not benefit much by offering differentiated products—sustainable and regular products.
“With differentiated products, firms would end up, again, competing more for the sustainable customer, overinvesting on green features,” he said. “If it’s left to the firms, they would go overboard.”
The researchers also explored how political leanings influence sustainable consumption. In their data, left-leaning consumers were more willing to pay for eco-friendly goods, while right-leaning consumers were more skeptical.
At first glance, a shift toward conservative consumers might seem unfavorable for sustainability-focused firms. But the model showed it could actually raise profits—again, by softening the costly competition to go greener.
“It can seem paradoxical,” Amaldoss said. “If the market gets more conservative, sustainability-focused firms save on costs and may end up making more money.”
The study’s takeaway is that the growing interest in sustainability doesn’t always guarantee the success of sustainability investments, Amaldoss said. The balance between doing well and doing good depends on how divided customers are and how fiercely competitors respond.
For managers, the takeaway is to measure—not assume—how much their customers truly value sustainability in each product category, and to recognize that the greenest path may not always be the most profitable.
“If you know that for burgers, for example, the skeptics have a strong dislike for alternative meats, your efforts to outcompete for sustainability may backfire.
Whereas perhaps for laundry detergents, people’s dislike for the eco-friendly product may not be as intense, and as a consequence, your green investments may still pay off,” Amaldoss said.
“Sustainability is a strategic choice. Companies can figure out how polarized consumers are within each product category, and make it work.”
First Published: Feb 13, 2026, 19:25
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