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Why Firms Should Care for all Consumers

Author

Listed:
  • Lisa Planer-Friedrich
  • Marco Sahm

Abstract

We compare the strategic potential of Corporate Social Responsibility and Customer Orientation as commitments to larger quantities in Cournot competition. In addition to profits, firms can choose to care for the surplus of either all consumers (CSR) or their own customers only (CO), and if so, to what extent. We find that firms prefer to care for all consumers, choosing positive levels of CSR.

Suggested Citation

  • Lisa Planer-Friedrich & Marco Sahm, 2015. "Why Firms Should Care for all Consumers," CESifo Working Paper Series 5612, CESifo.
    • Handle: RePEc:ces:ceswps:_5612
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp5612.pdf
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    References listed on IDEAS

    as
    1. Kopel, Michael & Lamantia, Fabio & Szidarovszky, Ferenc, 2014. "Evolutionary competition in a mixed market with socially concerned firms," Journal of Economic Dynamics and Control, Elsevier, vol. 48(C), pages 394-409.
    2. Konigstein, Manfred & Muller, Wieland, 2001. "Why firms should care for customers," Economics Letters, Elsevier, vol. 72(1), pages 47-52, July.
    3. Fershtman, Chaim & Judd, Kenneth L, 1987. "Equilibrium Incentives in Oligopoly," American Economic Review, American Economic Association, vol. 77(5), pages 927-940, December.
    4. 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.
    5. Goering, Gregory E., 2008. "Socially concerned firms and the provision of durable goods," Economic Modelling, Elsevier, vol. 25(3), pages 575-583, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Corporate Social Responsibility; Customer Orientation; Cournot duopoly; commitment;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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