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A Greater Price for a Greater Good? Evidence That Consumers Pay More for Charity-Linked Products

  • Daniel W. Elfenbein
  • Brian McManus
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    To study whether consumers will pay more for products that generate charitable donations, we analyze data from eBay on charity and noncharity auctions of otherwise identical products. Charity prices are 6 percent higher, on average, than noncharity prices. Bids below the closing price are also higher, as are bids by individuals bidding on identical charity and noncharity products. Bidders appear to value charity revenue at least partially as a public good, as they submit bids earlier in charity auctions, stimulating other bidders to bid more aggressively. Our results help explain why firms may pledge charitable donations, green production, or similar activities. (JEL D12, D44, D64, L81, M14, M31)

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/pol.2.2.28
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    File URL: http://www.aeaweb.org/aej/pol/data/2008-0041_data.zip
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    Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

    Volume (Year): 2 (2010)
    Issue (Month): 2 (May)
    Pages: 28-60

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    Handle: RePEc:aea:aejpol:v:2:y:2010:i:2:p:28-60
    Note: DOI: 10.1257/pol.2.2.28
    Contact details of provider: Web page: https://www.aeaweb.org/aej-policy
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    1. Roth, Alvin & Ockenfels, Axel & Ariely, Dan, 2005. "An Experimental Analysis of Ending Rules in Internet Auctions," Scholarly Articles 2579649, Harvard University Department of Economics.
    2. Douglas D. Davis & Laura Razzolini & Robert Reilly & Bart J. Wilson, 2003. "Raising Revenues for Charity: Auctions versus Lotteries," Working Papers 0301, VCU School of Business, Department of Economics.
    3. Jeffrey Ely & Tanjim Hossain, 2006. "Sniping and squatting in auction markets," Natural Field Experiments 00274, The Field Experiments Website.
    4. Neeraj Arora & Ty Henderson, 2007. "Embedded Premium Promotion: Why It Works and How to Make It More Effective," Marketing Science, INFORMS, vol. 26(4), pages 514-531, 07-08.
    5. David P. Baron, 2007. "Corporate Social Responsibility and Social Entrepreneurship," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(3), pages 683-717, 09.
    6. Mark Bagnoli & Susan G. Watts, 2003. "Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(3), pages 419-445, 09.
    7. Bajari, Patrick & Hortacsu, Ali, 2003. " The Winner's Curse, Reserve Prices, and Endogenous Entry: Empirical Insights from eBay Auctions," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 329-55, Summer.
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