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The Business of Business is Business: Why (Some) Firms Should Provide Public Goods when they Sell Private Goods

Author

Listed:
  • Chien-Yu Lai
  • Andreas Lange
  • John A. List
  • Michael K. Price

Abstract

This note links the commodity bundling literature with the literature on the private provision of public goods. We discuss the potential profitability of bundling strategies for both private firms and charitable organizations. Even in the absence of consumption complementarities, we show important cases when private and public goods should be bundled. For example, both a monopolist and a charity can profit from bundling the goods they provide. Linking sales to charitable contributions can also be beneficial for for-profit firms as it alleviates price-competition. Beyond providing a theoretical framework for understanding the incentive properties of bundling private and public goods, the study lends insights into the debate on the efficacy of corporate social responsibility.

Suggested Citation

  • Chien-Yu Lai & Andreas Lange & John A. List & Michael K. Price, 2017. "The Business of Business is Business: Why (Some) Firms Should Provide Public Goods when they Sell Private Goods," NBER Working Papers 23105, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:23105
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    References listed on IDEAS

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    Cited by:

    1. Andreas Lange & Claudia Schwirplies, 2021. "Bargaining With Charitable Promises: True Preferences and Strategic Behavior," CESifo Working Paper Series 9129, CESifo.
    2. Jintao Lu & Mengshang Liang & Chong Zhang & Dan Rong & Hailing Guan & Kristina Mazeikaite & Justas Streimikis, 2021. "Assessment of corporate social responsibility by addressing sustainable development goals," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(2), pages 686-703, March.

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    More about this item

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • H4 - Public Economics - - Publicly Provided Goods
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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