Business Intelligence

Green Goods: Are They Good Or Bad News For The Environment? Evidence From A Laboratory Experiment On Impure Public Goods

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Executive Summary

An impure public good is a commodity that combines public and private characteristics in fixed proportions. Green goods such as dolphin-friendly tuna or green electricity programs provide increasing popular examples of impure goods. The authors design an experiment to test how the presence of impure public goods affects pro-social behaviour. They set parameters, such that from a theoretical point of view the presence of the impure public good is behaviorally irrelevant. In a baseline setting, where the impure public good provides only small contributions to the public good, they observe that on aggregate pro-social behaviour, defined as total contributions to the public good, is lower in the presence of the impure good.

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