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The strategic incentive of corporate social responsibility in a vertically related market

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  • Chang, Chih-Wei
  • Li, Chia-Chun
  • Lin, Yan-Shu

Abstract

We build a duopoly supply chain model to find the optimal degree of CSR. It shows that a unique interior solution exists when the two brand firms decide their manufacturers' degree of CSR; but when they decide the distributors' degree of CSR, they enforce these distributors to fully participate in the CSR activities. Moreover, in the former case, even though consumer surplus and social welfare are better off, the two brand firms' revenues are worse off; in contrast, in the latter case, although consumer surplus and social welfare are worse off, the two brand firms can obtain more revenue.

Suggested Citation

  • Chang, Chih-Wei & Li, Chia-Chun & Lin, Yan-Shu, 2019. "The strategic incentive of corporate social responsibility in a vertically related market," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 88-97.
    • Handle: RePEc:eee:reveco:v:59:y:2019:i:c:p:88-97
    DOI: 10.1016/j.iref.2018.08.007
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    References listed on IDEAS

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    1. Björn Brand & Michael Grothe, 2015. "Social responsibility in a bilateral monopoly," Journal of Economics, Springer, vol. 115(3), pages 275-289, July.
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    Cited by:

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    3. Chintrakarn, Pandej & Jiraporn, Pornsit & Treepongkaruna, Sirimon, 2021. "How do independent directors view corporate social responsibility (CSR) during a stressful time? Evidence from the financial crisis," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 143-160.
    4. Bárcena-Ruiz, Juan Carlos & Sagasta, Amagoia, 2021. "Environmental policies with consumer-friendly firms and cross-ownership," Economic Modelling, Elsevier, vol. 103(C).
    5. Junlong Chen & Chaoqun Sun & Jiali Liu, 2022. "Corporate social responsibility, consumer sensitivity, and overcapacity," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(2), pages 544-554, March.

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