Is implicit cooperation reasonable for the economy? Corporate environmentalism under Kantian behavior

Hiroshi Kurata and Ngo Long

Economic Modelling, 2025, vol. 146, issue C

Abstract: We investigate the effects on the market when firms adopt Kantian behavior, inherently fostering implicit cooperation in the context of corporate environmentalism. We focus on oligopolistic firms’ environmental technology investments and compare investment levels under the Kantian equilibrium with those under the Nash equilibrium and socially optimal levels. When firms are concerned about the environmental impact of others, their environmental investment under the Kantian equilibrium exceeds that under the Nash equilibrium. Furthermore, Nash equilibrium investment is consistently below the social optimum, while Kantian equilibrium investment can either match or approach the socially optimal level. The Kantian equilibrium investment may exceed the socially optimal level if a firm have substantial environmental concerns.

Keywords: Corporate environmentalism; Oligopoly; Kantian equilibrium; Implicit cooperation (search for similar items in EconPapers)
JEL-codes: C72 D43 Q52 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:146:y:2025:i:c:s0264999325000240

DOI: 10.1016/j.econmod.2025.107029

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