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Price reactions when consumers are concerned about pro-social reputation

Goytom Kahsay, Laura Mørch Andersen () and Lars Hansen ()
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Laura Mørch Andersen: Department of Food and Resource Economics, University of Copenhagen

No 2014/09, IFRO Working Paper from University of Copenhagen, Department of Food and Resource Economics

Abstract: In this paper, we propose a reputation-signalling model of demand for consumer goods containing pro-social characteristics such as a ‘fair trade’ or ‘organic’ certification. We show that reputation signalling can reverse price reactions resembling the crowding-out of pre-existing motives for pro-social behavior seen in situations of volunteering and charitable giving. Finally, using a unique combination of questionnaire and purchase panel data, we present evidence of such reputation-driven reversal of price reactions in the Danish market for organic milk.

Keywords: net-crowding out; reversed price reactions; pro-social reputation; reputation signalling; consumer goods (search for similar items in EconPapers)
JEL-codes: D03 D11 D12 D51 D64 D82 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2014-10
New Economics Papers: this item is included in nep-mkt and nep-soc
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