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Social responsibility in a bilateral monopoly with R&D

Arturo Garcia (), Mariel Leal () and Sang-Ho Lee ()
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Arturo Garcia: Tecnológico de Monterrey
Mariel Leal: Tecnológico de Monterrey

Economics Bulletin, 2018, vol. 38, issue 3, 1467-1475

Abstract: This note examines social responsibility in a linear bilateral monopoly by incorporating a cost-reducing R&D investment and investigates an endogenous timing game. We find that in the presence of R&D, the retailer always adopts social responsibility irrespective of the timing of the game, but the manufacturer adopts only with its leadership in a sequential game where it can take the first-mover advantage. We also show that two sequential choices will be subgame perfect equilibria, but the commitment to the social responsibility by manufacturer is a payoff dominance outcome.

Keywords: social responsibility; R&D investment; fixed-timing game; endogenous-timing game (search for similar items in EconPapers)
JEL-codes: L1 M2 (search for similar items in EconPapers)
Date: 2018-08-05
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