Consumer Innovation Resistance in Green Product Competition: Pricing, Subsidies, and Promotional Strategy

ABSTRACT Consumer innovation resistance can persist even when consumers value environmental performance. This study examines how resistance affects green‐product pricing and innovation, and when producer subsidies, consumer subsidies, or private promotion improve market outcomes and welfare. A differentiated duopoly model allows the green firm to choose product greenness before price competition. Explicit equilibrium expressions and boundary comparisons identify economically admissible green‐degree choices. With endogenous greenness, greater resistance reduces innovation except at a knife‐edge cost coefficient, while increasing the green firm's optimized profit; the green‐demand response depends on the unit‐cost coefficient. Producer subsidies increase innovation, but need not increase green demand. Consumer subsidies increase optimized green‐firm profit, while the consumer‐paid price rises when induced innovation exceeds an explicit pass‐through threshold. Private promotion increases demand, effort, and profit on the strict interior branch. For low unit‐cost coefficients, its innovation effect changes sign at an analytical conversion‐efficiency threshold: beyond that threshold, promotion substitutes for product improvement. Welfare comparisons yield environmental‐benefit and public‐funds thresholds rather than a universal ranking of the three channels. Numerical experiments evaluate magnitudes and ranking reversals across structural parameters, report feasibility margins, and exclude combinations without strict interior maximizing solutions. The results distinguish adoption gains from innovation incentives and identify the economic conditions under which public support or private promotion is socially valuable.