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

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  • Feicht, Robert
  • Grimm, Veronika
  • Seebauer, Michael

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.

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  • Feicht, Robert & Grimm, Veronika & Seebauer, Michael, 2016. "An experimental study of corporate social responsibility through charitable giving in Bertrand markets," Journal of Economic Behavior & Organization, Elsevier, vol. 124(C), pages 88-101.
    • Handle: RePEc:eee:jeborg:v:124:y:2016:i:c:p:88-101
    DOI: 10.1016/j.jebo.2015.11.005
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    3. Sören Harrs & Bettina Rockenbach & Lukas M. Wenner, 2022. "Revealing good deeds: disclosure of social responsibility in competitive markets," Experimental Economics, Springer;Economic Science Association, vol. 25(5), pages 1349-1373, November.
    4. Vecchi, Martina, 2022. "Groups and socially responsible production: An experiment with farmers," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 372-392.
    5. Engelmann, Dirk & Friedrichsen, Jana & Kübler, Dorothea, 2018. "Fairness in Markets and Market Experiments," Rationality and Competition Discussion Paper Series 64, CRC TRR 190 Rationality and Competition.
    6. Fernandes, Maria Eduarda & Valente, Marieta, 2021. "What you get is not what you paid for: New evidence from a lab experiment on negative externalities and information asymmetries," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 93(C).
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    8. Jana Friedrichsen, 2017. "Is Socially Responsible Production a Normal Good?," Discussion Papers of DIW Berlin 1644, DIW Berlin, German Institute for Economic Research.
    9. James J Murphy & Molly Conlin & Bryan Haugstad, 2023. "An experimental test of cause-related marketing and charitable giving," Oxford Economic Papers, Oxford University Press, vol. 75(4), pages 890-901.
    10. Chia-Chi Sun & Shu-Ni Yen, 2022. "Evaluate the Causal Relations among the Criteria in Successful CSR Practices," JRFM, MDPI, vol. 15(11), pages 1-22, November.
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    More about this item

    Keywords

    Corporate social responsibility; Competition; Charitable giving; Experiment;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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