Bundling Public with Private Goods

36 Pages Posted: 16 May 2013 Last revised: 23 Feb 2017

See all articles by Gerrit Frackenpohl

Gerrit Frackenpohl

University of Bonn - Economic Science Area

Gert Pönitzsch

Heidelberg University - Alfred Weber Institute for Economics

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Date Written: August 16, 2013

Abstract

We propose a simple mechanism that might improve voluntary contributions to public goods. Using a laboratory experiment, we analyze how bundling public with private goods affects individuals’ valuations of both goods. In the experiment, subjects may purchase a private and a public good either separately or in the form of a bundle. The data show superadditivity for bundles of public and private goods, i.e., the willingness to pay for the bundle exceeds the willingness to pay for the two separate goods. By contrast, we find no superadditivity in control treatments with private goods only. We discuss several behavioral concepts in line with our results, as well as implications for fundraisers and firms.

Keywords: Public Goods, Bundling, Valuation, Superadditivity

JEL Classification: C91, D12, H41

Suggested Citation

Frackenpohl, Gerrit and Pönitzsch, Gert, Bundling Public with Private Goods (August 16, 2013). Available at SSRN: https://ssrn.com/abstract=2265335 or http://dx.doi.org/10.2139/ssrn.2265335

Gerrit Frackenpohl

University of Bonn - Economic Science Area ( email )

Adenauerallee 24-42
D-53113 Bonn
Germany

Gert Pönitzsch (Contact Author)

Heidelberg University - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany
+49 6221 54 2929 (Phone)

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