Glass Half Full: Strategic Packaging Decisions and Environmental Outcomes
Publication Date
6-11-2025
Abstract
Problem definition: Amid rising environmental concerns and regulatory pressures, firms, particularly beverage manufacturers, face complex trade-offs when choosing among packaging options such as non-recycled plastic, recycled plastic, and glass. While glass is often perceived as the most sustainable option, its true environmental impact depends critically on return and reuse rates, which are influenced by firm-led deposit-refund systems and sustainability advertising. Methodology/results: We develop an analytical model to study a firm's joint decisions on packaging type, pricing, and advertising efforts in a setting with heterogeneous consumer environmental awareness and greenwashing risk. We quantify the conditions under which glass can outperform plastic in terms of profit and emissions---or, paradoxically, lead to higher environmental harm. Under optimal pricing and advertising efforts, the firm can achieve a rare "win-win-win": prevent potential greenwashing while simultaneously improving profits and customer utility. We extend the model to examine the effects of recycled content mandates and endogenous deposit values, showing how firms can balance deposit incentives and advertising strategies to engage both environmentally aware and unaware consumers. A calibrated numerical study using data from a regional U.S. dairy firm reveals that adopting the model’s recommended policy—glass packaging with a premium price and targeted advertising—can increase profits by almost 60% while reducing emissions by over 30%. Managerial implications: Our findings can help identify when glass containers outperform plastic alternatives and guide how sustainability advertising and refundable deposits can be leveraged to boost glass return rates, improve environmental outcomes, enhance customer utility, and increase profits.
Document Type
Article
Keywords
Sustainable packaging, circular packaging, sustainability advertising, greenwashing, deposit-refund system
Disciplines
Business Administration, Management, and Operations
DOI
10.2139/ssrn.5289741
Source
SMU Cox: IT & Operations Management (Topic)
Language
English
