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Environmental corporate social responsibility and strategic transfer pricing in quantity competition

Author

Listed:
  • Jumpei Hamamura

    (Momoyama Gakuin University)

Abstract

Decision-making by environmentally conscious managers with environmental corporate responsibility (ECSR) is important because many companies emphasize environmental damage reduction for practical achievement of sustainable development. This study explores the transfer prices set by environmentally conscious managers under ECSR in situations of quantity competition. Whereas observable strategic transfer prices are generally below marginal cost in quantity competitions, our result suggests that the transfer price set by an environmentally conscious manager with ECSR exceeds marginal cost in quantity competition. This study provides a new rationale for internal transfer prices exceeding marginal cost, which is observed in practice.

Suggested Citation

  • Jumpei Hamamura, 2021. "Environmental corporate social responsibility and strategic transfer pricing in quantity competition," Economics Bulletin, AccessEcon, vol. 41(4), pages 2338-2347.
    • Handle: RePEc:ebl:ecbull:eb-21-00787
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    File URL: http://www.accessecon.com/Pubs/EB/2021/Volume41/EB-21-V41-I4-P202.pdf
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    More about this item

    Keywords

    transfer pricing; decentralized firm; environmental corporate social responsibility; quantity competition;
    All these keywords.

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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