A Theory of Corporate Social Responsibility in Oligopolistic Markets

Claudia Alves and Luis Santos-Pinto ()

Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) from Université de Lausanne, Faculté des HEC, DEEP

Abstract: This paper provides a theory of corporate social responsibility in imperfectly competitive markets. We consider a two-stage game where consumers have a preference from buying goods from firms that do CSR and where firms first decide simultaneously the amount per unit sold to give to social causes and then choose quantities. We find that firms will do CSR when products are complements but might not do it when products are substitutes. We characterize how contributions to social causes depend on costs of production and on the degree of product differentiation. Finally, we show that CSR increases quantities, prices and profits.

Keywords: corporate social responsibility; oligopoly; market outcomes (search for similar items in EconPapers)
JEL-codes: D21 D43 D64 M14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com and nep-mic
Date: 2008-10
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Persistent link: http://EconPapers.repec.org/RePEc:lau:crdeep:09.04

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