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The Demand for Products Linked to Public Goods: Evidence from an Online Field Experiment

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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 generate revenue for a charitable cause. Consumers respond strongly when their purchases generate small donations by an anonymous outside group, but responses are substantially weaker when the outside donations are relatively large. Responses are also strong when the outside donation requires a personal donation which consumers generally decline. Overall, increasing the salience of financial incentives appears to dampen consumers’ responses to charitable messages. We also present evidence that the donation pledges reduce price sensitivity and have positive long-term effects on demand.

Suggested Citation

  • Brian McManus & Richard Bennet, 2008. "The Demand for Products Linked to Public Goods: Evidence from an Online Field Experiment," Working Papers 08-28, NET Institute, revised Oct 2008.
  • Handle: RePEc:net:wpaper:0828
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    File URL: http://www.netinst.org/McManus_Bennet_08-28.pdf
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    References listed on IDEAS

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    1. Duncan, Brian, 1999. "Modeling charitable contributions of time and money," Journal of Public Economics, Elsevier, vol. 72(2), pages 213-242, May.
    2. Frey, Bruno S & Oberholzer-Gee, Felix, 1997. "The Cost of Price Incentives: An Empirical Analysis of Motivation Crowding-Out," American Economic Review, American Economic Association, vol. 87(4), pages 746-755, September.
    3. Stephan Meier, 2007. "Do Subsidies Increase Charitable Giving in the Long Run? Matching Donations in a Field Experiment," Journal of the European Economic Association, MIT Press, vol. 5(6), pages 1203-1222, December.
    4. Dean Karlan & John A. List, 2007. "Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment," American Economic Review, American Economic Association, vol. 97(5), pages 1774-1793, December.
    5. 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, September.
    6. 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, Oxford University Press, vol. 24(4), pages 434-446, March.
    7. 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.
    8. Duncan Boldy, 1999. "Contribution," World Scientific Book Chapters,in: Monitoring, Evaluating, Planning Health Services, chapter 25, pages 261-262 World Scientific Publishing Co. Pte. Ltd..
    9. 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.
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    More about this item

    Keywords

    Field Experiments; Charity-Linked Products; Corporate Social Responsibility; E-Commerce;

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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