Private CSR Activities in Oligopolistic Markets: Is there any room for Regulation?

Evangelos Mitrokostas () and Emmanuel Petrakis ()

No 816, Working Papers from University of Crete, Department of Economics

Abstract: The present paper examines the conditions under which the regulator can complement the provision of Corporate Social Responsibility (CSR) activities by private firms in an oligopolistic market. Our main finding is that if there is no credible information disclosure about SR characteristics of the firms' products to consumers, no firm will have incentives to undertake CSR effort in equilibrium. However, if the necessary information about the CSR aspects of each firm's product, otherwise unobservable, is made available to consumers through certification provided either by a profit-maximizing certifier or by the regulator, then both firms will have incentives to engage in CSR activities. Hence in equilibrium, consumers' surplus, firms profits and total welfare increase comparing to the benchmark case without CSR activities.

Keywords: Corporate Social Responsibility; Oligopoly; Vertical Differentiation; Certification. (search for similar items in EconPapers)
JEL-codes: M14 L13 L5 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-mic and nep-reg
Date: 2008-06-17
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Persistent link: http://EconPapers.repec.org/RePEc:crt:wpaper:0816

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