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Do markets erode social responsibility?

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  • Björn Bartling
  • Roberto A. Weber

Abstract

This paper studies socially responsible behavior in markets. We develop a laboratory product market in which low-cost production creates a negative externality for third parties, but where alternative production with higher costs mitigates the externality. Our data reveal a robust and persistent preference among consumers and firms for avoiding negative social impact in the market, reflected both in the composition of product types and in a price premium for socially responsible products. Socially responsible behavior is generally robust to varying market characteristics, such as increased seller competition and limited consumer information, and it responds to costs and prices in a manner consistent with a model in which positive social impact is a utility-enhancing feature of a consumer product. Consumers in markets exhibit slightly less social concern than subjects in comparable individual choice contexts.

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Bibliographic Info

Paper provided by Department of Economics - University of Zurich in its series ECON - Working Papers with number 134.

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Date of creation: Nov 2013
Date of revision: May 2014
Handle: RePEc:zur:econwp:134

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Keywords: Social responsibility; markets; externalities; competition; fairness;

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