Morals in Markets with Network Externalities

Climate change, biodiversity loss, pollution of air and waterways from plastics and other types of contaminants, are topical examples of major environmental problems confronting societies worldwide. In view of these environmental pressures, a debate has arisen around what constitutes a “moral economy,” and especially how markets shape socially responsible behavior. This experiment aims to enhance our economic understanding of how consumption behavior is affected by the way markets are organized. The project particularly seeks to shed light on the question to what extent the degree of market competition can effectively guide consumption of products that exhibit moral features. In the experiment, purchases of one product type will result in the real planting of trees to offset carbon emissions. The experiment will also feature consumption externalities, where buyers’ value is increasing in the number of other consumers purchasing the same product type. These types of network externalities are common for information‐technology based products, but they can also arise from moral choices such as participating in markets with environmental externalities, such as in the case of electric vehicles.