Pareto-Superiority of Corporate Social Responsibility in Unionised Industries

Luciano Fanti and Domenico Buccella

Arthaniti: Journal of Economic Theory and Practice, 2020, vol. 19, issue 2, 131-150

Abstract: Economists believe that a firm’s engagement in Corporate Social Responsibility (CSR) is motivated by objectives beyond increasing profits. Using a duopoly framework with convex technology and an industry-wide union-setting wage at the central level, this work shows that, when owners cooperatively select a level of CSR engagement, profits under CSR are higher than under standard profit maximisation; thus, the simple self-interest of firms’ owners leads to the adoption of CSR. Moreover, the union, consumers, and the overall social welfare in the presence of CSR activities are higher than without CSR. As such, the social concerns of firms’ owners yield a Pareto-superior outcome. JEL: J51, L13, M14

Keywords: Cournot duopoly; labour union; corporate social responsibility (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0976747919865217 (text/html)

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:sae:artjou:v:19:y:2020:i:2:p:131-150

DOI: 10.1177/0976747919865217

Access Statistics for this article

More articles in Arthaniti: Journal of Economic Theory and Practice
Bibliographic data for series maintained by SAGE Publications ().