The Strategic Adoption of Environmental Corporate Social Responsibility with Network Externalities

Xing Mingqing () and Sang-Ho Lee ()
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Xing Mingqing: School of Economics and Management, Weifang University, Weifang, China

The B.E. Journal of Theoretical Economics, 2024, vol. 24, issue 1, 399-418

Abstract: This paper adopts a green managerial delegation model in a polluting network industry wherein consumers form fulfilled rational expectations of network externalities. We show that firms are consistently incentivized to undertake ECSR (environmental corporate social responsibility) under price competition, while positive network externalities can increase the strategic level of ECSR. We also show that product substitutability between network products can play an important role in determining a firm’s strategic level of ECSR and resulting profits. Finally, ECSR is conducive to increasing environmental quality and social welfare in a high-polluting network industry. Therefore, the strategic adoption of ECSR in a network industry is Pareto-improving as environmental damage becomes serious.

Keywords: environmental corporate social responsibility; green managerial delegation; network externalities; price competition (search for similar items in EconPapers)
JEL-codes: D43 L13 L21 M21 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1515/bejte-2022-0136

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