Corporate Social Responsibility and Strategic Relationships

Yoshifumi Hino and Yusuke Zennyo

MPRA Paper from University Library of Munich, Germany

Abstract: We analyze a delegation game relevant to the conduct of corporate social responsibility (CSR) in which the firm's owner offers the manager a contract consisting of firm profit and social welfare. We derive three results that distinctly differ from existing findings. First, CSR decisions are strategic complements for firms. Second, with simultaneous CSR decisions, the equilibrium price is equal to marginal cost, despite the fact that firms compete in a Cournot duopoly. Finally, with sequential CSR decisions, unlike the follower firm, the leader firm never exhibits CSR. However, the follower firm can enjoy a profit equal to that derived by the leader in a Cournot-Stackelberg game.

Keywords: Keywords Corporate social responsibility; Cournot; Strategic substitute; Strategic complement (search for similar items in EconPapers)
JEL-codes: L13 L21 M14 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-bec, nep-com, nep-cta and nep-mic
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Corporate social responsibility and strategic relationships (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:67950

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