Price reactions when consumers are concerned about pro-social reputation

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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.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherDepartment of Food and Resource Economics, University of Copenhagen
Number of pages58
Publication statusPublished - 2014
SeriesIFRO Working Paper
Number2014/09

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