Why firms should care for all consumers

Lisa Planer-Friedrich and Marco Sahm

No 116, BERG Working Paper Series from Bamberg University, Bamberg Economic Research Group

Abstract: We compare the strategic potential of Corporate Social Responsibility (CSR) and Customer Orientation (CO) as commitments to larger quantities in Cournot competition, modeled as a multi-stage game. First, in addition to profits, firms can choose to care for the surplus of either all consumers (CSR) or their own customers only (CO). Second, they decide upon the weight of this additional objective. We find that firms prefer to care for all consumers, choosing positive levels of CSR. This result provides an explanation for the recent shift from CO to CSR in both, corporate culture and economic research.

Keywords: Corporate Social Responsibility; Customer Orientation; Cournot Duopoly; Commitment (search for similar items in EconPapers)
JEL-codes: D43 L13 L21 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-bec, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bamber:116

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