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Corporate social responsibility, entry and optimal privatization in an international mixed market

Qidi Zhang and Leonard F.S. Wang

International Review of Economics & Finance, 2022, vol. 77, issue C, 14-24

Abstract: We formulate a mixed oligopoly in which one public firm competes with two private firms: an established Corporate social responsibility (CSR) firm and a profit-maximizing entrant that could either be domestic or foreign-owned. We find that in an international market, with an increasing degree of CSR, the government might levy a higher tariff to restrict imports from the welfare viewpoint. Furthermore,a third firm entrant is going to increase welfare specially if the firm is domestic. Surprisingly, when the degree of CSR is in a certain range, privatization and tariff are always negatively correlated with CSR. Our findings suggest that differences in objectives between private firms may play an important role in government decisions on optimal privatization policies.

Keywords: Corporate social responsibility (CSR); Privatization; Entry; Import tariff (search for similar items in EconPapers)
JEL-codes: D43 L13 L21 M14 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.iref.2021.09.001

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