Economics at your fingertips  

Competition for limited critical resources and the adoption of environmentally sustainable strategies

Hsiao-Hui Lee, Manuel Nunez and Jose Cruz

European Journal of Operational Research, 2018, vol. 264, issue 3, 1130-1143

Abstract: We develop a game-theoretical methodology that incorporates competition for limited resources to explicitly model a firm's valuation and, hence, its decision whether to adopt environmentally sustainable strategies (e.g., recycling programs to replace limited natural resources, alternative technologies). Even if switching to environmentally sustainable alternatives proves too expensive for individual firms, or resource costs are expected to remain low, we show that competition for resources would still push firms to incur switching costs as they become more environmentally sustainable. Using a sample of firm-level data from the KLD database which includes firms' sustainability policies, we find empirical support that competition for resources is positively correlated with a firm's adoption of environmental strategies. Tests that use the Chinese government's 2010 rare-earth supply suspension as an exogenous shock to competition for limited resources suggest a causal interpretation for our finding.

Keywords: Decision analysis; Environmentally sustainable strategy; Game theory; Input competition (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-03-30
Handle: RePEc:eee:ejores:v:264:y:2018:i:3:p:1130-1143