Sustainability Agreements and Social Norms

23 Pages Posted: 19 Jul 2021 Last revised: 8 Feb 2022

See all articles by Roman Inderst

Roman Inderst

Goethe University Frankfurt

Felix Rhiel

Goethe University Frankfurt

Stefan Thomas

University of Tuebingen - Faculty of Law

Multiple version iconThere are 2 versions of this paper

Date Written: July 15, 2021

Abstract

Spurred by recent publications of NACs, there is an ongoing debate on whether and, if so, how competition law and its enforcement shall give due consideration to concerns of sustainability, notably (though not exclusively) environmental sustainability. With respect to horizontal agreements, we define circumstances where sustainability concerns may indeed warrant a somewhat modified approach for the assessment of consumer welfare implications of a market related measure. We posit that the willingness-to-pay (WTP) for more sustainable products may depend on social norms to a greater extent than the WTP for products, whose valuation is based mainly or even exclusively on their immediate use value for the consumer. What makes the integration of social norms in WTP challenging, however, is the fact that a sustainability agreement can impact this social norm in that it pushes the market towards more sustainable products, which, in turn, may then change the observable behavior of other consumers. Such repercussions may increase individual WTP for sustainable products in the entire consumer cohort. Absent the sustainability agreement, market segmentation or capacity and resource constraints could hamper the emergence of such a new social norm. Also, with such norm-based externalities, there is a first-mover disadvantage, which deserves recognition in the assessment of sustainability agreements.

Keywords: Horizontal agreements; sustainability; willingness-to-pay; conjoint analysis

JEL Classification: A13; K21; K32

Suggested Citation

Inderst, Roman and Rhiel, Felix and Thomas, Stefan, Sustainability Agreements and Social Norms (July 15, 2021). Available at SSRN: https://ssrn.com/abstract=3887314 or http://dx.doi.org/10.2139/ssrn.3887314

Roman Inderst

Goethe University Frankfurt ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt am Main, Hessen 60629
Germany
+49 (69) 798-34601 (Phone)
+49 (69) 798-35000 (Fax)

HOME PAGE: http://www.wiwi.uni-frankfurt.de/en/departments/finance/lehrstuhl/prof-dr-roman-inderst/team

Felix Rhiel

Goethe University Frankfurt ( email )

Gr├╝neburgplatz 1
Frankfurt am Main, 60323
Germany

Stefan Thomas (Contact Author)

University of Tuebingen - Faculty of Law ( email )

Geschwister Scholl Platz
Tuebingen, 72074
Germany
0049-7071-29-72556 (Phone)
0049-7071-29-2105 (Fax)

HOME PAGE: http://www.jura.uni-tuebingen.de/professoren_und_dozenten/thomas

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