Ethical differentiation and market behavior: An experimental approach

Julian Rode
Authors registered in the RePEc Author Service: Marc LE MENESTREL () and Robin Miles Hogarth ()

No 112, Working Papers from Barcelona School of Economics

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 ñ 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: price competition; Fair trade; ethical premia; contextual effects (search for similar items in EconPapers)
JEL-codes: A13 B41 D43 D46 (search for similar items in EconPapers)
Date: 2015-09
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Related works:
Journal Article: Ethical differentiation and market behavior: An experimental approach (2008)
Working Paper: Ethical differentiation and market behavior: An experimental approach (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:112

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