Crowding-Out Effects from a Discount to Reduce Disposable Consumer Plastics

In this study, we examine the effects of a discount as a direct price instrument and a nudge in the form of a communication strategy by shops on consumers' choice between reusable and disposable coffee cups in a neoliberal small open economy (Hong Kong). Our regression model comprises 223 structured observations of coffee shops with 522 data points. The discount only applies to cups brought by the customers and not to the reusable cups belonging to the shop. The results indicate that a financial incentive is not associated with a positive change in the behaviour of the targeted consumer. However, we find evidence of negative effects related to the choice of cup by consumers not targeted by the incentive. This incentive’s design might lead to the discouragement of the consumers who have not brought their own cups and to a stronger adherence to the default option of disposable cups. The communication of an "environmentally friendly" policy might actually discourage pro-environmental choices and negatively affect the behaviour towards reusable cups. However, the qualitative comparative analysis of the coffee shops’ characteristics indicates that those targeting a wealthier audience are more likely to observe the desired behaviour through a nudge strategy