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Social awareness and price competition
Author(s) -
Ben Elhadj Nada,
Gabszewicz Jean J.,
Tarola Ornella
Publication year - 2015
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/ijet.12053
Subject(s) - microeconomics , rationality , economics , norm (philosophy) , competition (biology) , product (mathematics) , product market , compliance (psychology) , mathematical economics , social psychology , psychology , political science , mathematics , ecology , geometry , law , biology , incentive
Human actions are often guided both by individual rationality and by social norms. In this paper we explore how market competition values the variants of a product, when these variants embody at different levels the requirements derived from some social norm. In a model where preferences of consumers depend partially on the levels of compliance of the variants with the social norm, we characterize the equilibrium path along which firms choose sequentially their level of compliance and their price.