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Advertising and Environmental Stewardship: Evidence from the BP Oil Spill

Lint Barrage, Eric Chyn, Justine Hastings

NBER Working Paper No. 19838
Issued in January 2014, Revised in April 2019
NBER Program(s):The Environment and Energy Program, The Industrial Organization Program, The Public Economics Program

This paper explores whether private markets can incentivize environmental stewardship. We examine the consumer response to the 2010 BP oil spill and test how BP's investment in the 2000-2008 “Beyond Petroleum” green advertising campaign affected this response. We find evidence consistent with consumer punishment: BP station margins and volumes declined by 2.9 cents per gallon and 4.2 percent, respectively, in the month after the spill. However, pre-spill advertising significantly dampened the price response, and may have reduced brand switching by BP stations. These results indicate that firms may have incentives to engage in green advertising without investments in environmental stewardship.

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Document Object Identifier (DOI): 10.3386/w19838

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