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Corporate Social Responsibility: A theory of the firm revisited with environmental issues

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  • Buccella, Domenico
  • Fanti, Luciano
  • Gori, Luca

Abstract

The Corporate Social Responsibility (CSR) theory of the firm states that, in strategic markets, social actions lead to a prisoner's dilemma. This paper develops a model with pollution externalities and environmental taxation to incentivise firms' abatement activities through green R&D investments. When the firms' objective function embed environmental issues (Environmental CSR, ECSR), a large spectrum of Nash equilibria emerges, from the Pareto inefficient to the Pareto efficient (ECSR,ECSR), depending on social concern and product differentiation degree. The time (in)consistency policy affects the endogenous market structure of the ECSR decision game more than in the standard CSR without abatement and taxation.

Suggested Citation

  • Buccella, Domenico & Fanti, Luciano & Gori, Luca, 2024. "Corporate Social Responsibility: A theory of the firm revisited with environmental issues," GLO Discussion Paper Series 1421, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:1421
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    More about this item

    Keywords

    Abatement; Corporate Social Responsibility; Duopoly; Emissions;
    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
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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