Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/207077 
Year of Publication: 
2019
Series/Report no.: 
Working Papers in Economics and Statistics No. 2019-11
Publisher: 
University of Innsbruck, Research Platform Empirical and Experimental Economics (eeecon), Innsbruck
Abstract: 
We present the results of a pre-registered natural field experiment designed to uncover a sophisticated form of discrimination against an immigrant minority in a market for credence goods. For this purpose, we introduce two markups: (i) the credence goods markup defined as the difference between the price paid by the same person for an ordinary service and an otherwise equivalent credence goods service; and (ii) the discriminatory markup defined as the difference between the price paid by a member of an immigrant minority group and the price paid by a member of the majority group for the same kind of service. We document the existence of a large credence goods markup of about 40%, on average. Moreover, we find a sizeable discriminatory markup for the credence goods service but no discriminatory markup for the ordinary service. The results of an ex-post survey suggest that this sophisticated form of discrimination is mainly due to the prejudicial behavior of sellers belonging to an established local ethnic minority group towards buyers belonging to a low-status immigrant ethnic minority group.
Subjects: 
natural field experiment
credence goods
discrimination
expert services
credence goods markup
discriminatory markup
JEL: 
C93
D82
J15
Document Type: 
Working Paper

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