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Corporate social responsibility, entry and optimal privatization in an international mixed market

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  • Zhang, Qidi
  • Wang, Leonard F.S.

Abstract

We formulate a mixed oligopoly in which one public firm competes with two private firms: an established Corporate social responsibility (CSR) firm and a profit-maximizing entrant that could either be domestic or foreign-owned. We find that in an international market, with an increasing degree of CSR, the government might levy a higher tariff to restrict imports from the welfare viewpoint. Furthermore,a third firm entrant is going to increase welfare specially if the firm is domestic. Surprisingly, when the degree of CSR is in a certain range, privatization and tariff are always negatively correlated with CSR. Our findings suggest that differences in objectives between private firms may play an important role in government decisions on optimal privatization policies.

Suggested Citation

  • Zhang, Qidi & Wang, Leonard F.S., 2022. "Corporate social responsibility, entry and optimal privatization in an international mixed market," International Review of Economics & Finance, Elsevier, vol. 77(C), pages 14-24.
    • Handle: RePEc:eee:reveco:v:77:y:2022:i:c:p:14-24
    DOI: 10.1016/j.iref.2021.09.001
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    References listed on IDEAS

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    Cited by:

    1. Ya‐Po Yang & Qidi Zhang & Leonard F. S. Wang, 2022. "Tariff simplification, privatization, and welfare superiority," Metroeconomica, Wiley Blackwell, vol. 73(2), pages 683-707, May.
    2. Chen, Huihui & Ho, Kung-Cheng & Zhang, Ming & Zhang, Qidi, 2023. "Effect of managerial ability toward corporate social responsibility on enterprise default risk," Finance Research Letters, Elsevier, vol. 54(C).
    3. Wen, Jun & Diao, Yu & Wang, Leonard F. S. & Sun, Ji, 2022. "Privatization, entry and corporate social responsibility with consumer cognition," MPRA Paper 115169, University Library of Munich, Germany.
    4. Ding Chen & Leonard F. S. Wang & Ji Sun, 2023. "Does CSR influence privatization wave?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1088-1097, March.
    5. Heywood, John S. & Wang, Zerong & Ye, Guangliang, 2023. "Spatial price discrimination in a mixed duopoly input market," Regional Science and Urban Economics, Elsevier, vol. 102(C).

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    More about this item

    Keywords

    Corporate social responsibility (CSR); Privatization; Entry; Import tariff;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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