An experimental study of corporate social responsibility through charitable giving in Bertrand markets

Robert Feicht, Veronika Grimm and Michael Seebauer

Journal of Economic Behavior & Organization, 2016, vol. 124, issue C, 88-101

Abstract: We experimentally investigate a Bertrand market with homogenous goods in which sellers can announce the donation of a share of their profits to an existing non-profit organization. In a 2×2 design, we vary the credibility of announcements and the efficiency of the contributions to the public fund. We find that sellers’ donations are strictly positive independently of the credibility of the announcements, and their donations are higher if announcements are credible and efficiency is high. However, market outcomes in terms of prices and profits do not differ significantly in any treatment that allows for contributions to a public fund. Analysis of buyer decisions reveals that prices are the main driver of purchase decisions while higher donations only affect purchase decisions when they are credible and price differences are negligible. Our results indicate that under intense competition the possibility of attracting customers through corporate social responsibility activities is limited, although the constant positive level of contributions suggests that norms lead to a certain minimum level of corporate social responsibility.

Keywords: Corporate social responsibility; Competition; Charitable giving; Experiment (search for similar items in EconPapers)
JEL-codes: C92 D12 D40 D64 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:124:y:2016:i:c:p:88-101

DOI: 10.1016/j.jebo.2015.11.005

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