A CSR Product Differentiation Model with Asymmetric Information

Leonardo Becchetti, Luisa Giallonardo and Maria Elisabetta Tessitore

Rivista italiana degli economisti, 2010, issue 2, 209-236

Abstract: The bottom up pressure of «concerned» consumers and the rise of «socially responsible» products represents a new market mechanism to fight inequality and promote social inclusion. To analyse the new phenomenon of competition in corporate social responsibility (CSR) amid doubts on consumer tastes and of the effective corporate SR stance we adopt a horizontal differentiation approach in which the Hotelling segment is reinterpreted as the space of product SR characteristics and consumer tastes are uncertain. We find equilibria of the pure location and of the price-location games and show what changes when we move from a duopoly of profit maximizing producers to a mixed duopoly. Our findings illustrate that a nonzero degree of CSR is the optimal choice of profit maximizing corporations under reasonable parametric intervals of consumers' «costs of ethical distance», corporate cost of CSR and uncertainty about consumer tastes.

Keywords: corporate social responsibility; horizontal product differentiation; consumers tastes uncertainty (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.rivisteweb.it/download/article/10.1427/32730 (application/pdf)
https://www.rivisteweb.it/doi/10.1427/32730 (text/html)
Access to full text is restricted to subscribers

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:mul:jqat1f:doi:10.1427/32730:y:2010:i:2:p:209-236

Access Statistics for this article

Rivista italiana degli economisti is currently edited by Giuliano Conti

More articles in Rivista italiana degli economisti from Società editrice il Mulino
Bibliographic data for series maintained by ().