The Signaling Role of Corporate Social Responsibility

Tomer Blumkin (), Yoram Margalioth () and Adi Sharoni ()
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Tomer Blumkin: Department of Economics, Ben-Gurion University, Postal: Beer-Sheba 84105, Israel, CesIfo, IZA.
Yoram Margalioth: The Buchmann Faculty of Law, Tel-Aviv University, Postal: Tel-Aviv 69978
Adi Sharoni: Department of Economics, Ben-Gurion University, Postal: Beer-Sheba 84105

No 2014:10, Working Paper Series, Center for Fiscal Studies from Uppsala University, Department of Economics

Abstract: We examine the role of CSR as a mechanism for private provision of public goods. We argue that corporations are using CSR to signal high product quality and demonstrate that signaling gives rise to an excessive level of contributions that offsets the positive externality, which causes the under-provision of public goods. We analyze the tax policy implications of such assertion. Accounting for this offset would call for a decrease in (and potentially elimination of) the subsidy offered to corporations engaged in CSR activities.

Keywords: Signaling; Corporate Social Responsibility; Public Goods; Pigouvian Taxation * (search for similar items in EconPapers)
JEL-codes: H20 H40 K30 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2014-07-30
New Economics Papers: this item is included in nep-cta and nep-pbe
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