Seminar

Signaling Corporate Social Responsibility: Testing Third-Party Certification vs. Self-Regulation in the Lab

Sabrina Teyssier (INRA - ALISS)

March 5, 2012, 11:00–12:30

Toulouse

Room MF 323

Agricultural and Food Industrial Organization Seminar

Abstract

Although consumer attitudes toward corporate social responsibility are positive, socially responsible products are far from gaining significant market shares. Information asymmetries have been identified as contributing to the attitude-behavior gap. Signaling may remedy this market failure. We use an experimental posted offer market to investigate the relative impact of certified labels, unregulated claims, and brands on sellers’ choice to supply socially responsible products and to signal it, and on consumers’ choice of ethical quality. When labels are certified by a third-party, or when consumers can identify ethical brands, a separating equilibrium emerges, whereby high and low-quality products are exchanged at different prices. However, efficiency gains are significant only under third-party certification. Unregulated claims are associated to ‘halo’ effects in consumer choices, which reduce their welfare as compared to a situation where signaling is not possible.