Corporate Social Responsibility in a Mixed Oligopoly

Abstract

This paper investigates how CSR firms influence a Cournot oligopoly with pollution. We define as CSR a firm that takes into account not only its profits but also internalises its own share of the externality and is sensitive to consumer surplus. The CSR firm obtains higher profits compared to profit-seeking firms. Also, the presence of at least one CSR firm improves social welfare and makes the first best Pigouvian taxation more lenient for Cournot firms. Finally, the CSR firm may induce the other firms to invest in "green" technology.

Corporate social responsibility, profits and welfare with managerial firms

“…Following the recent established literature (e.g. Goering 2007Goering , 2008Lambertini and Tampieri 2010), in the current model, we interpret the social concerns as part of consumer surplus: the feature of a CSR firm is to be sensitive to it. Consequently, we suppose that the firm wishes to maximise profits plus a fraction k of the market consumer surplus in its objective.…”

“…Baron 2001Baron , 2009Jensen 2001;Goering 2007Goering , 2008Lambertini and Tampieri 2010;Benabou and Tirole 2010).…”

“…Several scholars have focused their attention on the reasons that lead companies to embrace CSR behaviours (Baron 2001(Baron , 2009García-Gallego and Georgantzís 2009;Benabou and Tirole 2010;Reinhardt and Stavins 2010;Lambertini and Tampieri 2010). Baron (2001) put emphasis on the fact that companies may strategically follow CSR rules because guided by their selfishness.…”

Profit raising entry effects in network industries with Corporate Social Responsibility

“…Goering 2007Goering , 2008Lambertini and Tampieri, 2010;Fanti and Buccella, 2017b,c) our model assumes that all the social concerns can be interpreted as "consumer friendly activities". As a consequence, the characteristic of a CSR firm is to be responsive to consumers.…”

“…European Commision, 2001) as well as in the academic literature (e.g. Baron, 2001Baron, , 2009Jensen, 2001;Frank, 2003;Goering, 2007Goering, , 2008Lambertini and Tampieri, 2010;Benabou and Tirole, 2010;Planer-Friedrich and Sahm, 2016). On the other hand, network industries are gaining momentum in contemporary economics 2 .…”