Corporate social responsibility, profits and welfare with managerial firms

Luciano Fanti and Domenico Buccella

International Review of Economics, 2017, vol. 64, issue 4, No 3, 356 pages

Abstract: Abstract This paper analyses the equilibrium outcomes in a duopoly market where firms follow corporate social responsibility (CSR) behaviours under managerial delegation. It is shown that in the subgame perfect Nash equilibrium of the game, both firms emerge as CSR-type, and the firms’ profitability (resp. the welfare of consumers and society) are beneficiated (resp. harmed) by the CSR behaviour. This result is in sharp contrast with the conventional result (established under non-managerial firms) that the higher the CSR sensitivity to consumer surplus, the lower (resp. higher) the firms’ profitability (resp. the consumer surplus and social welfare).

Keywords: CSR; Managerial delegation; Duopoly; Profitability; Social welfare (search for similar items in EconPapers)
JEL-codes: D21 L13 L14 M14 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (35)

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DOI: 10.1007/s12232-017-0276-5

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