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Emission tax and strategic environmental corporate social responsibility in a Cournot–Bertrand comparison

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  • Xu, Lili
  • Chen, Yuyan
  • Lee, Sang-Ho

Abstract

This study considers strategic relations between emission tax and environmental corporate social responsibility (ECSR) in a Cournot–Bertrand comparison, and analyzes two different timings of the games between a tax-then-ECSR (T game) and an ECSR-then-tax (E game). We show that the T game always yields higher emission tax than the E game irrespective of competition modes, but lower ECSR under Cournot while higher ECSR when the marginal damage is high under Bertrand. Additionally, compared with Bertrand, Cournot yields lower (higher) ECSR in the T (E) game, but lower emission tax in the E game while higher emission tax when the product substitutability is low in the T game. We finally show that firms always prefer Cournot competition with the commitment of E game irrespective of the product substitutability and marginal damage.

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  • Xu, Lili & Chen, Yuyan & Lee, Sang-Ho, 2021. "Emission tax and strategic environmental corporate social responsibility in a Cournot–Bertrand comparison," MPRA Paper 108498, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:108498
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    Cited by:

    1. Chen, Junlong & Sun, Chaoqun & Xu, Bo & Kong, Yan, 2024. "Emission reduction technology R&D and sharing with environmental corporate social responsibility," Technological Forecasting and Social Change, Elsevier, vol. 207(C).
    2. Xing, Mingqing & Lee, Sang-Ho, 2024. "Cross-ownership and green managerial delegation contracts in a mixed oligopoly," Journal of Environmental Economics and Management, Elsevier, vol. 126(C).
    3. Chul‐Hi Park & Sang‐Ho Lee, 2023. "Emission taxation, green R&D, and managerial delegation contracts with environmental and sales incentives," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 2366-2377, June.
    4. Ahmed Kouider Aissa & Alessandro Tampieri, 2024. "Green Consumers and the Transition to Sustainable Production," Working Papers - Economics wp2024_04.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    5. Chul‐Hi Park & Sang‐Ho Lee, 2023. "Environmental corporate social responsibility under price competition and the second‐mover advantage: An endogenous timing approach," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(4), pages 817-829, December.
    6. Lili Xu & Sang‐Ho Lee, 2022. "Non‐cooperative and cooperative environmental corporate social responsibility with emission taxes," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2849-2862, October.
    7. Bárcena-Ruiz, Juan Carlos & Garzón, María Begoña & Sagasta, Amagoia, 2023. "Environmental corporate social responsibility, R&D and disclosure of “green” innovation knowledge," Energy Economics, Elsevier, vol. 120(C).
    8. Hirose, Kosuke & Matsumura, Toshihiro, 2024. "Optimal Energy-Saving Investments and Jevons Paradox in Duopoly Markets," MPRA Paper 121836, University Library of Munich, Germany.
    9. Tomoda, Yasunobu & Ouchida, Yasunori, 2023. "Endogenous bifurcation into environmental CSR and non-environmental CSR firms by activist shareholders," Journal of Environmental Economics and Management, Elsevier, vol. 122(C).
    10. Iannucci, Gianluca & Tampieri, Alessandro, 2023. "On the evolutionary interplay between environmental CSR and emission tax," Energy Economics, Elsevier, vol. 128(C).
    11. Jafar Hussain & Chien‐Chiang Lee, 2022. "A green path towards sustainable development: Optimal behavior of the duopoly game model with carbon neutrality instruments," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 1523-1541, December.
    12. Xu, Lili & Zhang, Yidan & Matsumura, Toshihiro, 2022. "Cournot–Bertrand comparison under common ownership in a mixed oligopoly," MPRA Paper 114644, University Library of Munich, Germany.
    13. Hirose, Kosuke & Matsumura, Toshihiro, 2023. "Green transformation in oligopoly markets under common ownership," Energy Economics, Elsevier, vol. 126(C).
    14. Hirose, Kosuke & Ishihara, Akifumi & Matsumura, Toshihiro, 2024. "Tax versus regulations: Polluters’ incentives for loosening industry emission targets," Energy Economics, Elsevier, vol. 136(C).
    15. Xu, Lili & Matsumura, Toshihiro, 2022. "Welfare-reducing price competition under relative performance delegation with convex costs," Economic Modelling, Elsevier, vol. 112(C).
    16. Xu, Lili & Zhao, Qinghong & Chen, Yuyan & Lee, Sang-Ho, 2023. "Post privatization of high-speed rail with corporate social responsibility (CSR) in an international transportation market: Mandatory CSR versus voluntary CSR," Economics of Transportation, Elsevier, vol. 35(C).
    17. Lili Xu & Yidan Zhang & Toshihiro Matsumura, 2023. "Competition mode and common ownership in a mixed oligopoly," Manchester School, University of Manchester, vol. 91(4), pages 306-319, July.
    18. Xu, Lili & Lee, Sang-Ho, 2024. "Consumers' environmental awareness and endogenous managerial delegation choice between sales and environmental incentives," Energy Economics, Elsevier, vol. 136(C).
    19. Xin Jiang & Guanglong Li & Xianxian Fan, 2023. "Environmental Protection Fee-to-Tax and Corporate Environmental Social Responsibility: A Test Based on Corporate Life Cycle Theory," Sustainability, MDPI, vol. 15(3), pages 1-21, January.
    20. Marie-Laure Cabon-Dhersin & Natacha Raffin, 2024. "Cooperation in green R &D and environmental policies: tax or standard," Journal of Regulatory Economics, Springer, vol. 66(2), pages 205-237, December.

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    More about this item

    Keywords

    Emission tax; environmental corporate social responsibility; Cournot–Bertrand comparison; tax-then-ECSR; ECSR-then-tax;
    All these keywords.

    JEL classification:

    • 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
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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