The Business of Business is Business: Why (Some) Firms Should Provide Public Goods When They Sell Private Goods

25 Pages Posted: 30 Jan 2017 Last revised: 18 Feb 2022

See all articles by Chien-Yu Lai

Chien-Yu Lai

University of Chicago

Andreas Lange

University of Hamburg

John A. List

University of Chicago - Department of Economics

Michael Price

Georgia State University - Department of Economics

Date Written: January 2017

Abstract

This note links the commodity bundling literature with the literature on the private provision of public goods. We discuss the potential profitability of bundling strategies for both private firms and charitable organizations. Even in the absence of consumption complementarities, we show important cases when private and public goods should be bundled. For example, both a monopolist and a charity can profit from bundling the goods they provide. Linking sales to charitable contributions can also be beneficial for for-profit firms as it alleviates price-competition. Beyond providing a theoretical framework for understanding the incentive properties of bundling private and public goods, the study lends insights into the debate on the efficacy of corporate social responsibility.

Suggested Citation

Lai, Chien-Yu and Lange, Andreas and List, John A. and Price, Michael, The Business of Business is Business: Why (Some) Firms Should Provide Public Goods When They Sell Private Goods (January 2017). NBER Working Paper No. w23105, Available at SSRN: https://ssrn.com/abstract=2907908

Chien-Yu Lai (Contact Author)

University of Chicago ( email )

Andreas Lange

University of Hamburg ( email )

Allende-Platz 1
Hamburg, 20146
Germany

John A. List

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

Michael Price

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States

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