Incentives, performance and desirability of socially responsible firms in a Cournot oligopoly

Luca Lambertini () and Alessandro Tampieri

Economic Modelling, 2015, vol. 50, issue C, 40-48

Abstract: This paper investigates how socially responsible behaviour influences firms' profits and social welfare when production entails an environmental externality. We study a Cournot oligopoly with pollution, with one CSR operating in the market. A CSR firm not only takes into account its profits but also internalises its own share of pollution and is sensitive to consumer surplus. With a large enough market, the CSR firm obtains higher profits than its profit-seeking competitors, and induces a higher level of social welfare. The results are confirmed when a socially optimal tax on pollution is adopted. Indeed, even if the environmental concern restrains the production of a CSR firm, the social concern expands it. The second effect more than offsets the first one in a large market, making the CSR production strategy be more aggressive compared to its competitors.

Keywords: CSR; Environmental externality; Pigouvian taxation; Market stability (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (120)

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Related works:
Working Paper: On the Stability of Mixed Oligopoly Equilibria with CSR Firms (2011)
Working Paper: Corporate Social Responsibility in a Mixed Oligopoly (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:50:y:2015:i:c:p:40-48

DOI: 10.1016/j.econmod.2015.05.016

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