IDEAS home Printed from https://ideas.repec.org/p/bol/bodewp/wp959.html
   My bibliography  Save this paper

CSR in an Asymmetric Duopoly with Environmental Externalities

Author

Listed:
  • L. Lambertini
  • A. Palestini
  • A. Tampieri

Abstract

We investigate a linear state dfferential game describing an asymmetric Cournot duopoly with capacity accumulation la Ramsey and a negative environmental externality (pollution), in which one of the firms has adopted corporate social responsibility (CSR) in its statute, and therefore includes consumer surplus and the environmental effects of production in its objective function. If the market is sufficiently large, the CSR firm sells more, accumulates more capital and earns higher profits than its profit-seeking rival.

Suggested Citation

  • L. Lambertini & A. Palestini & A. Tampieri, 2014. "CSR in an Asymmetric Duopoly with Environmental Externalities," Working Papers wp959, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:wp959
    as

    Download full text from publisher

    File URL: http://amsacta.unibo.it/4067/1/WP959.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Fershtman, Chaim & Judd, Kenneth L, 1987. "Equilibrium Incentives in Oligopoly," American Economic Review, American Economic Association, vol. 77(5), pages 927-940, December.
    2. Leonardo Becchetti & Rocco Ciciretti, 2009. "Corporate social responsibility and stock market performance," Applied Financial Economics, Taylor & Francis Journals, vol. 19(16), pages 1283-1293.
    3. Matthew J. Kotchen, 2006. "Green Markets and Private Provision of Public Goods," Journal of Political Economy, University of Chicago Press, vol. 114(4), pages 816-845, August.
    4. Lambertini, Luca & Tampieri, Alessandro, 2015. "Incentives, performance and desirability of socially responsible firms in a Cournot oligopoly," Economic Modelling, Elsevier, vol. 50(C), pages 40-48.
    5. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
    6. Donsimoni, Marie-Paule & Economides, Nicholas S & Polemarchakis, Herakles M, 1986. "Stable Cartels," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 317-327, June.
    7. Baron, David P., 2001. "Private Politics," Research Papers 1689, Stanford University, Graduate School of Business.
    8. Cremer, Helmuth & Marchand, Maurice & Thisse, Jacques-Francois, 1989. "The Public Firm as an Instrument for Regulating an Oligopolistic Market," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 283-301, April.
    9. Besley, Timothy & Ghatak, Maitreesh, 2007. "Retailing public goods: The economics of corporate social responsibility," Journal of Public Economics, Elsevier, vol. 91(9), pages 1645-1663, September.
    10. Roland Bénabou & Jean Tirole, 2010. "Individual and Corporate Social Responsibility," Economica, London School of Economics and Political Science, vol. 77(305), pages 1-19, January.
    11. Reinganum, Jennifer F, 1982. "A Dynamic Game of R and D: Patent Protection and Competitive Behavior," Econometrica, Econometric Society, vol. 50(3), pages 671-688, May.
    12. Fisher-Vanden, Karen & Thorburn, Karin S., 2011. "Voluntary corporate environmental initiatives and shareholder wealth," Journal of Environmental Economics and Management, Elsevier, vol. 62(3), pages 430-445.
    13. Claudia Alves & Luís Santos-Pinto, 2008. "A Theory of Corporate Social Responsibility in Oligopolistic Markets," Cahiers de Recherches Economiques du Département d'économie 09.04, Université de Lausanne, Faculté des HEC, Département d’économie.
    14. Aurora García‐Gallego & Nikolaos Georgantzís, 2009. "Market Effects of Changes in Consumers' Social Responsibility," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 235-262, March.
    15. Leonardo Becchetti & Nazaria Solferino & M. Elisabetta Tessitore, 2005. "The dynamics of socially responsible product differentiation and the habit formation of socially responsible consumers," Working Papers 03, ECINEQ, Society for the Study of Economic Inequality.
    16. Luca Lambertini & Alessandro Tampieri, 2012. "Corporate Social Responsibility and Firms’ Ability to Collude," Palgrave Macmillan Books, in: Sabri Boubaker & Duc Khuong Nguyen (ed.), Board Directors and Corporate Social Responsibility, chapter 9, pages 167-178, Palgrave Macmillan.
    17. Sabri Boubaker & Duc Khuong Nguyen (ed.), 2012. "Board Directors and Corporate Social Responsibility," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-38930-4, December.
    18. Aaron K. Chatterji & David I. Levine & Michael W. Toffel, 2009. "How Well Do Social Ratings Actually Measure Corporate Social Responsibility?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 125-169, March.
    19. de Fraja, Giovanni & Delbono, Flavio, 1990. "Game Theoretic Models of Mixed Oligopoly," Journal of Economic Surveys, Wiley Blackwell, vol. 4(1), pages 1-17.
    20. Constantine Manasakis & Evangelos Mitrokostas & Emmanuel Petrakis, 2007. "Corporate Social Responsibility in Oligopoly," Working Papers 0707, University of Crete, Department of Economics.
    21. Ramon Casadesus-Masanell & Pankaj Ghemawat, 2006. "Dynamic Mixed Duopoly: A Model Motivated by Linux vs. Windows," Management Science, INFORMS, vol. 52(7), pages 1072-1084, July.
    22. David P. Baron, 2001. "Private Politics, Corporate Social Responsibility, and Integrated Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 7-45, March.
    23. David P. Baron, 2009. "A Positive Theory of Moral Management, Social Pressure, and Corporate Social Performance," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 7-43, March.
    24. De Fraja, Giovanni, 1991. "Efficiency and Privatisation in Imperfectly Competitive Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 39(3), pages 311-321, March.
    25. Cellini, Roberto & Lambertini, Luca, 1998. "A Dynamic Model of Differentiated Oligopoly with Capital Accumulation," Journal of Economic Theory, Elsevier, vol. 83(1), pages 145-155, November.
    26. Vickers, John, 1985. "Delegation and the Theory of the Firm," Economic Journal, Royal Economic Society, vol. 95(380a), pages 138-147, Supplemen.
    27. Wirl, Franz & Feichtinger, Gustav & Kort, Peter M., 2013. "Individual firm and market dynamics of CSR activities," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 169-182.
    28. Becchetti, Leonardo & Solferino, Nazaria, 2005. "The dynamics of ethical product differentiation and the habit formation of socially responsible consumers," AICCON Working Papers 8-2005, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    29. Brekke, Kjell Arne & Nyborg, Karine, 2008. "Attracting responsible employees: Green production as labor market screening," Resource and Energy Economics, Elsevier, vol. 30(4), pages 509-526, December.
    30. David P. Baron & Daniel Diermeier, 2007. "Introduction to the Special Issue on Nonmarket Strategy and Social Responsibility," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(3), pages 539-545, September.
    31. R. Cellini & L. Lambertini & G. Leitmann, 2005. "Degenerate Feedback and Time Consistency in Dynamic Games," Working Papers 535, Dipartimento Scienze Economiche, Universita' di Bologna.
    32. de Fraja, Giovanni & Delbono, Flavio, 1989. "Alternative Strategies of a Public Enterprise in Oligopoly," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 302-311, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lambertini, Luca & Tampieri, Alessandro, 2015. "Incentives, performance and desirability of socially responsible firms in a Cournot oligopoly," Economic Modelling, Elsevier, vol. 50(C), pages 40-48.
    2. Luciano Fanti & Domenico Buccella, 2018. "Corporate Social Responsibility and Managerial Bonus Systems," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 4(2), pages 349-365, July.
    3. Liu, Qian & Wang, Leonard F.S. & Chen, Charlie L., 2018. "CSR in an oligopoly with foreign competition: Policy and welfare implications," Economic Modelling, Elsevier, vol. 72(C), pages 1-7.
    4. 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.
    5. Laszlo Goerke, 2022. "Trade unions and corporate social responsibility," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(1), pages 177-203, March.
    6. Laszlo Goerke, 2019. "Corporate social responsibility and tax avoidance," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 21(2), pages 310-331, April.
    7. Bertrand Crettez & Naila Hayek & Peter M. Kort, 2021. "A Dynamic Multi-Objective Duopoly Game with Capital Accumulation and Pollution," Mathematics, MDPI, vol. 9(16), pages 1-34, August.
    8. Yasuhiko Nakamura, 2020. "Endogenously choosing the timing of setting strategic contracts’ levels and content in a managerial mixed duopoly with welfare-based and sales delegation contracts," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(3), pages 363-402, September.
    9. Pi Jiancai & Zhao Runzhi, 2020. "Corporate Social Responsibility and Wage Inequality," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(3), pages 1-16, July.
    10. Chen, Charlie L. & Liu, Qian & Li, Jie & Wang, Leonard F.S., 2016. "Corporate social responsibility and downstream price competition with retailer's effort," International Review of Economics & Finance, Elsevier, vol. 46(C), pages 36-54.
    11. 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.
    12. Junlong Chen & Chaoqun Sun & Jiali Liu & Yan Huo, 2021. "The optimal level of corporate social responsibility based on the duopoly model," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 177-184, January.
    13. Ee, Mong Shan & Chao, Chi-Chur & Wang, Leonard F.S. & Yu, Eden S.H., 2018. "Environmental corporate social responsibility, firm dynamics and wage inequality," International Review of Economics & Finance, Elsevier, vol. 56(C), pages 63-74.
    14. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lambertini, Luca & Tampieri, Alessandro, 2015. "Incentives, performance and desirability of socially responsible firms in a Cournot oligopoly," Economic Modelling, Elsevier, vol. 50(C), pages 40-48.
    2. Luca Lambertini & Arsen Palestini & Alessandro Tampieri, 2016. "CSR in an Asymmetric Duopoly with Environmental Externality," Southern Economic Journal, John Wiley & Sons, vol. 83(1), pages 236-252, July.
    3. Luca Lambertini & Alessandro Tampieri, 2012. "Corporate Social Responsibility and Firms’ Ability to Collude," Palgrave Macmillan Books, in: Sabri Boubaker & Duc Khuong Nguyen (ed.), Board Directors and Corporate Social Responsibility, chapter 9, pages 167-178, Palgrave Macmillan.
    4. Lisa Planer-Friedrich & Marco Sahm, 2017. "Strategic Corporate Social Responsibility," CESifo Working Paper Series 6506, CESifo.
    5. Planer-Friedrich, Lisa & Sahm, Marco, 2017. "Strategic corporate social responsibility," BERG Working Paper Series 124, Bamberg University, Bamberg Economic Research Group.
    6. 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.
    7. Luciano Fanti & Domenico Buccella, 2017. "Corporate social responsibility in a game-theoretic context," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 44(3), pages 371-390, September.
    8. Luciano Fanti & Domenico Buccella, 2018. "Corporate Social Responsibility and Managerial Bonus Systems," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 4(2), pages 349-365, July.
    9. Andaluz, J. & Elsadany, A.A. & Jarne, G., 2023. "Dynamic behavior in a Cournot duopoly with social responsibility," Chaos, Solitons & Fractals, Elsevier, vol. 172(C).
    10. Luciano Fanti & Domenico Buccella, 2020. "Strategic trade policy with socially concerned firms," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(3), pages 269-292, September.
    11. Alessandro Gioffré & Alessandro Tampieri & Antonio Villanacci, 2021. "Private versus public companies with strategic CSR," Journal of Economics, Springer, vol. 133(2), pages 129-166, July.
    12. Luciano Fanti & Domenico Buccella, 2017. "Corporate social responsibility, profits and welfare with managerial firms," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 64(4), pages 341-356, December.
    13. Becchetti, Leonardo & Palestini, Arsen & Solferino, Nazaria & Elisabetta Tessitore, M., 2014. "The socially responsible choice in a duopolistic market: A dynamic model of “ethical product” differentiation," Economic Modelling, Elsevier, vol. 43(C), pages 114-123.
    14. Luciano Fanti & Domenico Buccella, 2018. "Profitability of corporate social responsibility in network industries," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 65(3), pages 271-289, September.
    15. Shachi Rai & Sangeeta Bansal, 2015. "Factors Explaining Corporate Social Responsibility Expenditure in India," Review of Market Integration, India Development Foundation, vol. 7(1), pages 37-61, April.
    16. Steve Martin, 2019. "Moral management in competitive markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(3), pages 541-560, June.
    17. Patricia Crifo & Vanina Forget, 2013. "La responsabilité sociale et environnementale des entreprises : mirage ou virage ?," Working Papers hal-00830642, HAL.
    18. Markus Kitzmueller & Jay Shimshack, 2012. "Economic Perspectives on Corporate Social Responsibility," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 51-84, March.
    19. Planer-Friedrich, Lisa & Sahm, Marco, 2017. "Why Firms Should Care for All Consumers," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168257, Verein für Socialpolitik / German Economic Association.
    20. Mark Bagnoli & Susan G. Watts, 2020. "On the corporate use of green bonds," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(1), pages 187-209, January.

    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bol:bodewp:wp959. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dipartimento Scienze Economiche, Universita' di Bologna (email available below). General contact details of provider: https://edirc.repec.org/data/sebolit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.