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The demand for products linked to public goods: Evidence from an online field experiment

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  • McManus, Brian
  • Bennet, Richard
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    Abstract

    We conduct a field experiment at a nonprofit organization's online store to study how demand changes when consumers' purchases can generate revenue for a charitable cause. When purchases can trigger a small donation by an outside anonymous group, consumers respond strongly and apparently without regard for the specific conditions that trigger the donation. Consumers respond similarly when the outside donation requires a personal donation which consumers generally decline. When the outside donations are relatively large, however, consumers appear to pay close attention to the trigger conditions, and increase their purchases only where needed to generate the outside donation. Overall, increasing the salience of financial incentives weakens consumers' positive responses to the outside group's donation pledges. We also present evidence that the donation pledges have positive long-term effects on demand and may reduce price sensitivity.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Public Economics.

    Volume (Year): 95 (2011)
    Issue (Month): 5 ()
    Pages: 403-415

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    Handle: RePEc:eee:pubeco:v:95:y:2011:i:5:p:403-415

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    Web page: http://www.elsevier.com/locate/inca/505578

    Related research

    Keywords: Field experiments; Nonprofit organizations; Corporate social responsibility; E-commerce;

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    References

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    1. Dean Karlan & John List, 2006. "Does price matter in charitable giving? Evidence from a large-scale natural field experiment," Natural Field Experiments 00279, The Field Experiments Website.
    2. Daniel W. Elfenbein & Brian McManus, 2010. "A Greater Price for a Greater Good? Evidence That Consumers Pay More for Charity-Linked Products," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 28-60, May.
    3. Peter T. L. Popkowski Leszczyc & Michael H. Rothkopf (deceased), 2010. "Charitable Motives and Bidding in Charity Auctions," Management Science, INFORMS, vol. 56(3), pages 399-413, March.
    4. Yan Chen & Xin Li & Jeffrey MacKie-Mason, 2006. "Online fund-raising mechanisms: A field experiment," Natural Field Experiments 00225, The Field Experiments Website.
    5. Stephan Meier, 2006. "Do subsidies increase charitable giving in the long run?: matching donations in a field experiment," Working Papers 06-18, Federal Reserve Bank of Boston.
    6. Eckel, Catherine C. & Grossman, Philip J., 2003. "Rebate versus matching: does how we subsidize charitable contributions matter?," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 681-701, March.
    7. Gneezy, U. & Rustichini, A., 1998. "Pay Enough - Or Don't Pay at All," Discussion Paper 1998-57, Tilburg University, Center for Economic Research.
    8. Chen Yan & Li Xin & MacKie-Mason Jeffrey K, 2005. "Online Fund-Raising Mechanisms: A Field Experiment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(2), pages 1-39, December.
    9. Strahilevitz, Michal & Myers, John G, 1998. " Donations to Charity as Purchase Incentives: How Well They Work May Depend on What You Are Trying to Sell," Journal of Consumer Research, University of Chicago Press, vol. 24(4), pages 434-46, March.
    10. Duncan, Brian, 1999. "Modeling charitable contributions of time and money," Journal of Public Economics, Elsevier, vol. 72(2), pages 213-242, May.
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    Cited by:
    1. Dierk Herzer , Peter Nunnenkamp, 2012. "Private Donations, Government Grants, Commercial Activities, and Fundraising: Cointegration and Causality for NGOs in International Development Cooperation," Kiel Working Papers 1769, Kiel Institute for the World Economy.
    2. Pitschner, Stefan & Pitschner-Finn, Sebastian, 2014. "Non-profit differentials in crowd-based financing: Evidence from 50,000 campaigns," Economics Letters, Elsevier, vol. 123(3), pages 391-394.

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