Corporate social responsibility, social optimum, and the environment-growth tradeoff

Juin-Jen Chang, Jhy-Hwa Chen and Ming-Fang Tsai

Resource and Energy Economics, 2022, vol. 69, issue C

Abstract: This paper examines the implications of environmental corporate social responsibility (CSR) for the environment-growth tradeoff and social optimum in a dynamic general equilibrium growth model. We show that environmental CSR activity loosens the tradeoff between the environment and growth, but it cannot achieve the social optimum. Firm participation in environmental CSR induces the perceived CSR of green consumers and increases their willingness to pay. Because the environmental CSR promotes more consumption and increases growth, the environment-growth tradeoff loosens up in the competitive equilibrium. However, to translate the CSR perceived benefits into their profits, firms need some degree of monopoly power to set their prices to capture the stronger demand. CSR is thus promoted as a marketing strategy to help companies achieve their competitive advantage, and becomes a way of product differentiation in the environment of monopolistic competition. Since monopoly power serves as a catalyst, CSR alone cannot achieve the first-best optimum in terms of the environment and growth by fully removing the distortions caused by market imperfection.

Keywords: Corporate social responsibility; Environment-growth tradeoff; Social optimum (search for similar items in EconPapers)
JEL-codes: H23 L21 O40 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0928765522000288
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: https://EconPapers.repec.org/RePEc:eee:resene:v:69:y:2022:i:c:s0928765522000288

DOI: 10.1016/j.reseneeco.2022.101311

Access Statistics for this article

Resource and Energy Economics is currently edited by J. F. Shogren and S. Smulders

More articles in Resource and Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().