On the Scope of Externalities in Experimental Markets
32 Pages Posted: 27 Apr 2016 Last revised: 30 Aug 2017
Date Written: June 9, 2017
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: Suggested Citation