Environmental corporate social responsibility and strategic transfer pricing in quantity competition

Jumpei Hamamura ()
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Jumpei Hamamura: Momoyama Gakuin University

Economics Bulletin, 2021, vol. 41, issue 4, 2338-2347

Abstract: Decision-making by environmentally conscious managers with environmental corporate responsibility (ECSR) is important because many companies emphasize environmental damage reduction for practical achievement of sustainable development. This study explores the transfer prices set by environmentally conscious managers under ECSR in situations of quantity competition. Whereas observable strategic transfer prices are generally below marginal cost in quantity competitions, our result suggests that the transfer price set by an environmentally conscious manager with ECSR exceeds marginal cost in quantity competition. This study provides a new rationale for internal transfer prices exceeding marginal cost, which is observed in practice.

Keywords: transfer pricing; decentralized firm; environmental corporate social responsibility; quantity competition (search for similar items in EconPapers)
JEL-codes: L1 M1 (search for similar items in EconPapers)
Date: 2021-12-29
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