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On the Scope of Externalities in Experimental Markets

32 Pages Posted: 27 Apr 2016 Last revised: 30 Aug 2017

Björn Bartling

University of Zurich - Department of Economics; Norwegian School of Economics (NHH) - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Vanessa Valero

University of Zurich

Roberto A. Weber

University of Zurich - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: June 9, 2017

Abstract

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, Weber & Yao (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 (i) replicate earlier results demonstrating substantial degrees of market social responsibility and (ii) find that the willingness of market actors to act pro-socially is only slightly affected by whether the impacts are concentrated or diffused.

Keywords: Negative externalities, scope of externalities, social responsibility, market experiments

JEL Classification: C92, D62, M14

Suggested Citation

Bartling, Björn and Valero, Vanessa and Weber, Roberto A., On the Scope of Externalities in Experimental Markets (June 9, 2017). Experimental Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2770498 or http://dx.doi.org/10.2139/ssrn.2770498

Björn Bartling (Contact Author)

University of Zurich - Department of Economics ( email )

Zuerich, 8006
Switzerland

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Vanessa Valero

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

Roberto A. Weber

University of Zurich - Department of Economics ( email )

Zuerich, 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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