CSR, vertical bargaining and cost pass-through

Xiaolin Xue, Leonard F.S. Wang and Qidi Zhang

Asia-Pacific Journal of Accounting & Economics, 2024, vol. 31, issue 6, 946-965

Abstract: This paper explores the impacts of an upstream monopoly’s social concerns in vertically related markets. Our study shows that the upstream CSR leads to an improvement in social welfare, regardless of the downstream market competition mode. However, the impacts of upstream CSR are more significant under Cournot than under Bertrand competition. Moreover, an upstream monopoly with CSR has a stronger incentive to pass on cost savings downwards to benefit consumers. Despite these advantages, being socially responsible does not pay off for upstream monopolies. Therefore, economic support from the government is necessary and important to encourage and promote CSR practices.

Date: 2024
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DOI: 10.1080/16081625.2023.2250798

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