Ethical differentiation and market behavior: An experimental approach

Julian Rode, Robin Hogarth () and Marc Le Menestrel ()

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: Does ethical differentiation of products affect market behavior? We examined this issue in triopolistic experimental markets where producers set prices. One producer’s costs were higher than the others. In two treatments, the additional costs were attributed to compliance with ethical guidelines. In the third, no justification was provided. Many participants playing the role of consumers reduced their experimental gains by purchasing the ethically differentiated product at a higher price – whether or not they knew the amount of extra cost. Individual differences were important (students of business/economics paid smaller premia than others). Finally, we speculate about the observed “demand function” for ethics and emphasize the use of experimental methodology to complement empirical studies designed to assess the potential market for ethically differentiated products.

Keywords: Fair trade; ethical premia; price competition; contextual effects; Leex (search for similar items in EconPapers)
JEL-codes: A13 B41 D43 D46 (search for similar items in EconPapers)
Date: 2004-10, Revised 2006-05
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Ethical differentiation and market behavior: An experimental approach (2015)
Journal Article: Ethical differentiation and market behavior: An experimental approach (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:779

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