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Why Firms Should Care for All Consumers

Author

Listed:
  • Lisa Planer-Friedrich

    (University of Bamberg)

  • Marco Sahm

    (University of Bamberg)

Abstract

We compare the strategic potential of Corporate Social Responsibility (CSR) and Customer Orientation (CO) as commitments to larger quantities in Cournot competition, modeled as a multi-stage game. First, in addition to profits, firms can choose to care for the surplus of either all consumers (CSR) or their own customers only (CO). Second, they decide upon the weight of this additional objective. We find that firms prefer to care for all consumers, choosing positive levels of CSR. This result provides an explanation for the recent shift in corporate culture from CO to CSR.

Suggested Citation

  • Lisa Planer-Friedrich & Marco Sahm, 2018. "Why Firms Should Care for All Consumers," Economics Bulletin, AccessEcon, vol. 38(3), pages 1603-1612.
    • Handle: RePEc:ebl:ecbull:eb-18-00167
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    References listed on IDEAS

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    Cited by:

    1. Luciano Fanti & Domenico Buccella, 2020. "Social Responsibility in a Bilateral Monopoly with Downstream Convex Technology," Journal of Industry, Competition and Trade, Springer, vol. 20(4), pages 761-776, December.
    2. Xu Lili & Lee Sang-Ho, 2022. "Corporate Profit Tax and Strategic Corporate Social Responsibility Under Foreign Acquisition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 22(1), pages 123-151, January.
    3. De Chiara, Alessandro & Manna, Ester, 2022. "Firms' ownership, employees’ altruism, and product market competition," Economic Modelling, Elsevier, vol. 109(C).
    4. Ohnishi, Kazuhiro, 2022. "Wage-rise contract and mixed Cournot duopoly competition with profit-maximizing and socially concerned firms," MPRA Paper 112536, University Library of Munich, Germany.
    5. Juan Carlos Bárcena‐Ruiz & Amagoia Sagasta, 2021. "Cross‐ownership and corporate social responsibility," Manchester School, University of Manchester, vol. 89(4), pages 367-384, July.
    6. Ohnishi, Kazuhiro, 2022. "Socially concerned duopolies with lifetime employment as a strategic commitment," MPRA Paper 111625, University Library of Munich, Germany.
    7. Laszlo Goerke, 2022. "Trade unions and corporate social responsibility," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(1), pages 177-203, March.
    8. Mariana Cunha & Filipa Mota, 2020. "Coordinated Effects of Corporate Social Responsibility," Journal of Industry, Competition and Trade, Springer, vol. 20(4), pages 617-641, December.
    9. Daniele Crotti & Elena Maggi, 2023. "Social Responsibility and Urban Consolidation Centres in Sustainable Freight Transport Markets," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 9(2), pages 829-850, July.
    10. Xu, Lili & Lee, Sang-Ho, 2021. "Strategic corporate social responsibility and tariff policies: The timing of commitments and policy implications," MPRA Paper 108499, University Library of Munich, Germany.
    11. Yasuhiko Nakamura, 2022. "Corporate social responsibility and endogenous competition structure in an industry composed of firms with biased managers," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 69(2), pages 301-321, June.
    12. Ohnishi, Kazuhiro, 2023. "Why firms should care for consumers: Complementary goods," MPRA Paper 117305, University Library of Munich, Germany.
    13. Luciano Fanti & Domenico Buccella, 2021. "Corporate social responsibility in unionised network industries," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 68(2), pages 235-262, June.
    14. Luciano Fanti & Domenico Buccella, 2020. "Pareto-Superiority of Corporate Social Responsibility in Unionised Industries," Arthaniti: Journal of Economic Theory and Practice, , vol. 19(2), pages 131-150, December.
    15. Lisa Planer-Friedrich & Marco Sahm, 2020. "Strategic corporate social responsibility, imperfect competition, and market concentration," Journal of Economics, Springer, vol. 129(1), pages 79-101, January.

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    More about this item

    Keywords

    Corporate Social Responsibility; Customer Orientation; Cournot Duopoly; Commitment;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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