IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-03791920.html
   My bibliography  Save this paper

Caring or Pretending to Care? Social Impact, Firms' Objectives, and Welfare

Author

Listed:
  • Michele Fioretti

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

Abstract

Many firms claim that "social impact" influences their strategies. This paper develops a structural model that quantifies social impact as the sum of surpluses to a firm and its stakeholders. With data from a for-profit firm whose prosocial expenditures are measurable and salient to consumers, the analysis shows that the firm spends prosocially beyond profit maximization, thereby increasing welfare substantially. Incentivizing a standard profit-maximizing firm to behave similarly would require subsidies amounting to 58% of its prosocial expenditures because consumers' willingness to pay is relatively inelastic to prosocial expenses. Therefore, social impact resembles a self-imposed welfareenhancing tax with limited pass-through.

Suggested Citation

  • Michele Fioretti, 2022. "Caring or Pretending to Care? Social Impact, Firms' Objectives, and Welfare," Post-Print hal-03791920, HAL.
    • Handle: RePEc:hal:journl:hal-03791920
    DOI: 10.1086/720459
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03791920
    as

    Download full text from publisher

    File URL: https://sciencespo.hal.science/hal-03791920/document
    Download Restriction: no
    File URL: https://libkey.io/10.1086/720459?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    Citations

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


    Cited by:

    1. Michele Fioretti & Victor Saint-Jean & Simon C. Smith, 2024. "NGO Activism: Exposure vs. Influence," Papers 2411.06875, arXiv.org, revised Nov 2024.
    2. Francesco Del Prato & Marc Fleurbaey, 2024. "Workers as Partners: a Theory of Responsible Firms in Labor Markets," Papers 2411.05567, arXiv.org, revised Nov 2024.

    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:hal:journl:hal-03791920. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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.