On the scope of externalities in experimental markets
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We study how the scope of negative externalities from market activity affects the willingness of market actors to exhibit social responsibility. Using the laboratory experimental paradigm introduced by Bartling et al. (Q J Econ 130(1):219–266, 2015), we compare the voluntary internalization of negative social impacts by market actors in cases where the negative externality is diffused among many subjects or is concentrated on a single subject. We (1) replicate earlier results demonstrating substantial degrees of market social responsibility and (2) find that the willingness of market actors to act pro-socially is only slightly affected by whether the impacts are concentrated or diffused.
KeywordsNegative externalities Scope of externalities Social responsibility Market experiments
JEL ClassificationC92 D62 M14
We would like to thank the Co-Editor, Marie Claire Villeval, and two anonymous referees for helpful comments and suggestions. We also gratefully acknowledge financial support from the Swiss National Science Foundation (Grant Number 100018_165943).
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