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2017-05-12 | Peer Reviewed

Price reactions when consumers are concerned about pro-social reputation

Kahsay, Goytom Abraha , Laura Mørch Andersen and Lars Hansen. 2014. “Price reactions when consumers are concerned about pro-social reputation.” Department of Food and Resource Economics 2014/09: 58.
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In this paper, we propose a reputation-signalling model of demand for consumer goods containing pro-social characteristics such as a ‘fair trade’ or ‘organic’ certification. We show that reputation signalling can reverse price reactions resembling the crowding-out of pre-existing motives for pro-social behavior seen in situations of volunteering and charitable giving. Finally, using a unique combination of questionnaire and purchase panel data, we present evidence of such reputation-driven reversal of price reactions in the Danish market for organic milk.