Strategic corporate social responsibility, imperfect competition, and market concentration

Lisa Planer-Friedrich () and Marco Sahm ()
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Lisa Planer-Friedrich: Otto-Friedrich-Universität Bamberg
Marco Sahm: Otto-Friedrich-Universität Bamberg

Journal of Economics, 2020, vol. 129, issue 1, No 4, 79-101

Abstract: Abstract We examine the strategic use of corporate social responsibility (CSR) in imperfectly competitive markets. Before firms decide upon supply, they choose a level of CSR which determines the weight they put on consumer surplus in their objective function. First, we consider Cournot competition and show that the endogenous level of CSR is positive for any given number of firms. However, positive CSR levels imply smaller equilibrium profits. Second, we find that an incumbent monopolist can use CSR as an entry deterrent. Both results indicate that CSR may increase market concentration. Finally, we show that CSR levels decrease as the degree of product heterogeneity increases in Cournot competition and are zero in Bertrand Competition.

Keywords: Corporate social responsibility; Cournot competition; Market concentration; Entry deterrence; Strategic delegation; Bertrand competition (search for similar items in EconPapers)
JEL-codes: D42 D43 L12 L13 L21 L22 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (44)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:129:y:2020:i:1:d:10.1007_s00712-019-00663-x

DOI: 10.1007/s00712-019-00663-x

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