Corporate social responsibility and endogenous competition structure in an industry composed of firms with biased managers

Yasuhiko Nakamura ()
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Yasuhiko Nakamura: Nihon University

International Review of Economics, 2022, vol. 69, issue 2, No 6, 321 pages

Abstract: Abstract In this study, we revisit the endogenous choice between price and quantity contracts in a duopoly composed of asymmetric firms engaged in corporate social responsibility (CSR) with possibly biased managers. We find that Cournot competition can change to an equilibrium competition structure regardless of the degree of homogeneity between the goods produced by them and the degree of importance of their CSR. Furthermore, we show that Bertrand competition, in addition to Cournot competition, can be observed in equilibrium when the degrees of importance of CSR between firm owners are sufficiently asymmetric with each other. This result is supported by the manipulation of the types of managers with respect to the biased scale of the demand size in the market by their owners when the degree of importance of their CSR changes.

Keywords: Corporate social responsibility; Biased expectations; Aggressiveness; Cournot competition; Bertrand competition (search for similar items in EconPapers)
JEL-codes: D43 L13 L14 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s12232-022-00393-5

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