 Law, social responsibility, and outsourcingQiang Fu, Jie Gong and Ivan Png International Journal of Industrial Organization, 2018, vol. 57, issue C, 114-146 Abstract: Previous research into law and corporate social responsibility mostly assumes that the vertical structure of production is exogenous. Here, we allow a brand to choose between vertical integration and outsourcing. With outsourcing, the brand avoids some liability and responsibility, but loses direct control over the producer’s infringement of law or code of conduct. Infringement increases with production, so the brand tailors production to guide the producer’s infringement. The elasticity of demand for the product affects the degree to which, under outsourcing, the brand will increase production to induce the producer to reduce cost through infringement. If the demand is sufficiently elastic relative to the social harm caused by infringement, the optimal policy is to reduce avoidance such that the brand chooses vertical integration. However, if the demand is sufficiently inelastic relative to the social harm, then the optimal policy is to increase avoidance such that the brand chooses outsourcing. Keywords: Law; Corporate social responsibility; Outsourcing; Vertical integration (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:57:y:2018:i:c:p:114-146 DOI: 10.1016/j.ijindorg.2018.01.002 Access Statistics for this article International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal More articles in International Journal of Industrial Organization from Elsevier |
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