Corporate social responsibility and strategic trade policy: an endogenous timing game and its policy implications

Sumi Cho, Sang-Ho Lee and Xoan Hoang

MPRA Paper from University Library of Munich, Germany

Abstract: This study incorporates the corporate social responsibility (CSR) initiatives of a domestic firm and analyzes strategic trade policy toward a foreign firm in a different market structure. We show that the tariff rate under a foreign (domestic) firm’s leadership is lowest when the degree of CSR is large (small). We also show that the foreign firm’s leadership yields the highest welfare when the degree of CSR is intermediate, while the domestic firm’s leadership yields the highest welfare otherwise. In an endogenous-timing game, we show that a simultaneous-move outcome is the unique equilibrium when the degree of CSR is small; thus, it is never socially desirable. We also show that the domestic firm’s leadership can be an equilibrium, which results in the highest welfare when the degree of CSR is large. Finally, when the degree of CSR is large, collusive behaviors between the domestic and foreign firms can increase welfare.

Keywords: corporate social responsibility; strategic trade policy; endogenous-timing game; simultaneous-move; sequential-move (search for similar items in EconPapers)
JEL-codes: H21 L13 L31 (search for similar items in EconPapers)
Date: 2019-08-01
New Economics Papers: this item is included in nep-bec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Journal Article: Corporate social responsibility and strategic trade policy: An endogenous timing game and its policy implications (2019)
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