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The Role of Socially Concerned Consumers in the Coexistence of Ethical and Standard Firms

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  • Fanelli, Domenico

Abstract

The purpose of this paper is to investigate how socially concerned consumers' preferences affects firms' decisions to commit to social responsibility. In a market in which firms face the same demand function and products are homogeneous, we find that a large group of socially concerned consumers or a low cost of social responsibility induces an equilibrium outcome in which ethical and standard firms coexists in the same market. Our result is relevant because we do not assume a product differentiation setup and firms do not separate the market through labeling schemes.

Suggested Citation

  • Fanelli, Domenico, 2010. "The Role of Socially Concerned Consumers in the Coexistence of Ethical and Standard Firms," MPRA Paper 20117, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:20117
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    File URL: https://mpra.ub.uni-muenchen.de/20117/1/MPRA_paper_20117.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    CSR; Price Competition; Duopoly; ESS; Replicator Dynamics;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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