The Signaling Role of Charitable Contributions by Businesses: A Tax Policy Perspective

Tomer Blumkin, Yoram Margalioth, Efraim Sadka and Adi Sharoni

American Law and Economics Review, 2022, vol. 24, issue 1, 87-115

Abstract: Empirical evidence suggests that charitable contributions to public goods by businesses may be driven not only by the familiar warm glow of giving motive but also as a means for businesses to signal high product quality. Building on this finding, we present an analytical framework that demonstrates that the optimal degree of subsidization should decrease with the extent to which the signal is informative and may even turn into a tax when the signal is sufficiently strong.

Keywords: H2; H4; K3 (search for similar items in EconPapers)
Date: 2022
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