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Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods
Author(s) -
Bagnoli Mark,
Watts Susan G.
Publication year - 2003
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1430-9134.2003.00419.x
Subject(s) - public good , private good , competition (biology) , business , value (mathematics) , intermediate good , final good , commerce , public economics , economics , production (economics) , microeconomics , ecology , machine learning , computer science , biology
We model firms as competing for socially responsible consumers by linking the provision of a public good (environmentally friendly or socially responsible activities) to sales of their private goods. In many cases, too little of the public good is provided, but under certain conditions, competition leads to excessive provision. Further, there is generally a trade‐off between more efficient provision of the private and the public good. Our results indicate that the level of private provision of the public good varies inversely with the competitiveness of the private‐good market and that the types of public goods provided are biased toward those for which consumers have high participation value.