Abstract: With the popularization of sustainable consumption concepts, consumers are willing to pay higher prices for sustainable products. The premium of this green commodity can be quickly transferred to the upstream of supply chain, and promote the upgrading of the green industry. The investment in sustainability may be high (named H-type firm) or low (named L-type firm) which while it is not observable invisible to their consumers population. A signaling game model between the firm and the consumer is established to investigates the firm’s quality and price strategy in the presence of considering sustainability consideration and asymmetric information. Firstly, the quality and price strategy under symmetric information is calculated to obtain the benchmark of sustainability concerned issue. Furthermore, based on signaling game model under asymmetric information, firm’s separating equilibrium and pooling equilibrium is obtained. Then, the impact of sustainability concerned consumers and sustainability preference is analyzed. It can be found that more sustainability concerned consumers make the H-type firm better off under full and symmetric information situation. However, under asymmetric information, increasing consumer awareness of firm’s sustainability investment may hurt the H-type firm. In addition, increasing sustainability preference is beneficial to the H-type firm, but it may lead to a higher profit for the L-type firm. Finally, when the fraction of sustainability concerned consumers is high enough, the H-type firm prefer to pool rather than reveal his true sustainability type. This paper aims at investigating the interaction between a firm and consumers in the presence of sustainability concerned sustainability consideration and asymmetric information. The finding of paper provides management insights for the firms.

Key words: asymmetric Information, signaling, sustainability-concerned consumers