Review of Industrial Organization

, Volume 47, Issue 1, pp 51–69 | Cite as

Ethical Differentiation and Consumption in an Incentivized Market Experiment

Article

Abstract

In surveys consumers express preferences for ethical goods. Some authors claim, however, that survey responses do not translate into actual costly purchase behavior. To study if ethical consumption and differentiation occur in an incentive-compatible setting, this paper implements a design of an incentivized market experiment, which has been studied in the context of homogenous goods and both theoretically and experimentally engenders a dynamic of price decrease. This experiment establishes that ethical differentiation can be an effective strategy for sellers with ethically motivated buyers; and, although there is an ethical price premium, it accrues to the charity rather than to the seller.

Keywords

Economic experiments Ethical consumption Ethical differentiation Ethical goods Price competition 

Supplementary material

11151_2015_9455_MOESM1_ESM.doc (348 kb)
Supplementary material 1 (DOC 348 kb)

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Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.NIMA (Applied Microeconomics Research Unit), Departamento de Economia, Escola de Economia e GestãoUniversidade do MinhoBragaPortugal

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