The Effect of Competition on Toxic Pollution Releases

Simon, Daniel; Prince, Jeffrey

doi:10.2139/ssrn.2456732

Cited by 1 publication

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“…Fernández-Kranz and Santaló (2010) and Flammer (2015b) establish with variations in import duties and market concentration that stronger competition increases CSR efforts at the firm level. Simon and Prince (2016) find that a reduction in industrial concentration in the U.S. is associated with lower toxic releases at the factory level. Aghion et al (2020) report that firms more frequently engage in green innovation if consumers prefer sustainability, and increasingly so in more competitive markets.…”

Section: Introductionmentioning

confidence: 83%

Corporate Social Responsibility by Joint Agreement

Schinkel

Treuren

2021

SSRN Journal

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Industry-wide voluntary agreements are touted as a means for corporations to take more corporate social responsibility (CSR). We study what type of joint CSR agreement induces firms to increase CSR efforts in a model of oligopolistic competition with differentiated products. Consumers have a willingness to pay for more responsibly manufactured products. Firms are driven by profit, and possibly by intrinsic motivation, to invest in costly CSR efforts. We find that cooperative agreements directly on the level of CSR reduce CSR efforts compared to competition. Such agreements throttle both for-profit and intrinsic motivations for CSR. CSR efforts only increase if agreements are permitted solely on output. Such production agreements, however, reduce total welfare in the market and raise antitrust concerns. Taking externalities into account may help to justify a production agreement under a total welfare standard, but not agreements on CSR directly. Moreover, simply requiring a higher CSR level by regulation while preserving competition always gives higher within-market welfare.

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