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Corporate Social Responsibility And Environmental Taxation With Endogenous Entry

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  • XU, LILI
  • LEE, SANG-HO

Abstract

This study considers Corporate Social Responsibility (CSR) in Cournot markets with endogenous entry and investigates the effects of CSR on environmental taxation and welfare consequences. We show that the optimal tax under free entry is higher than that under blockaded entry and also higher than marginal environmental damage. We then show that a higher taxation is socially excessive from the viewpoint of socially optimal CSR, which requires an appropriate regulatory framework for CSR promotion. Finally, we show that the environment is less damaged but social welfare deteriorates accompanied with CSR when the fixed cost is low, while pollution abatement activities will reduce the optimal tax and improves both environmental damage and social welfare.

Suggested Citation

  • Xu, Lili & Lee, Sang-Ho, 2018. "Corporate Social Responsibility And Environmental Taxation With Endogenous Entry," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 59(2), pages 61-82, December.
    • Handle: RePEc:hit:hitjec:v:59:y:2018:i:2:p:61-82
    DOI: 10.15057/29712
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    Cited by:

    1. Chokri Aloui & Khaïreddine Jebsi, 2022. "Does corporate social responsibility solve the chicken‐and‐egg problem for a two‐sided platform?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 3235-3256, October.
    2. Iannucci, Gianluca & Tampieri, Alessandro, 2023. "On the evolutionary interplay between environmental CSR and emission tax," Energy Economics, Elsevier, vol. 128(C).
    3. Buccella, Domenico & Fanti, Luciano & Gori, Luca, 2024. "Corporate Social Responsibility: A theory of the firm revisited with environmental issues," GLO Discussion Paper Series 1421, Global Labor Organization (GLO).
    4. Xu, Lili & Chen, Yuyan & Lee, Sang-Ho, 2022. "Emission tax and strategic environmental corporate social responsibility in a Cournot–Bertrand comparison," Energy Economics, Elsevier, vol. 107(C).
    5. Xu, Lili & Lee, Sang-Ho, 2021. "Strategic Corporate Social Responsibility by a Multinational Firm and International Privatization Policies," MPRA Paper 105651, University Library of Munich, Germany.
    6. Fukuda, Katsufumi & Ouchida, Yasunori, 2020. "Corporate social responsibility (CSR) and the environment: Does CSR increase emissions?," Energy Economics, Elsevier, vol. 92(C).

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    More about this item

    Keywords

    consumer-friendly firm; corporate social responsibility; environmental tax; free entry; blockaded entry;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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