 Partially Observable Corporate Social Responsibility: The Limits of DifferentiationAleix Calveras and József Sákovics No 305, Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh Abstract: We investigate investment incentives in credence corporate social responsibility (CCSR) under different market structures. In duopoly, for high enough market transparency the Örms differentiate their product by (only) one of them investing in the SR (clean) technology. If the firms merge, with high enough market transparency (and product traceability) the monopolist also invests in (only) one plant but the necessary market transparency is higher, so competition promotes CCSR. When market transparency lacks product traceability, whenever the monopolist invests it is in both plants, but the consumer information needed regarding the technologies being used by the firm is even higher. Overall we Önd that the market pushes toward product differentiation, which is both good and bad: there is usually some investment by a firm, but also some factory producing with the dirty technology. We conclude that ìgreenîcompetition policy must be nuanced, taking into account (or regulating) both transparency and traceability. Keywords: Credence goods; Asymmetric information; Transparency; Traceability (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:305 Access Statistics for this paper More papers in Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh 31 Buccleuch Place, EH8 9JT, Edinburgh. Contact information at EDIRC. |
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