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Optimal Strategies of Product Price, Quality, and Corporate Environmental Responsibility

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  • Wei Peng

    (Nonlinear Science Center, College of Economics and Management, Shandong University of Science and Technology, Qingdao 266590, China)

  • Baogui Xin

    (Nonlinear Science Center, College of Economics and Management, Shandong University of Science and Technology, Qingdao 266590, China)

  • Yekyung Kwon

    (Division of Global Business Administration, Dongseo University, Busan 47011, Korea)

Abstract

With the awakening of environmental consciousness, more and more firms desire to go “green” by shifting their focus of corporate social responsibility (CSR) from charitable contributions to environmental actions called corporate environmental responsibility (CER). We develop a monopoly differential game to depict optimal corporate strategies of product price, quality, and CER. Using the Hamilton–Jacobi–Bellman (HJB) equation, we analyze optimal feedback equilibrium strategies for pricing and investing in both quality and CER with/without government subsidies. Numerical simulations show that government subsidy can improve CER and profit.

Suggested Citation

  • Wei Peng & Baogui Xin & Yekyung Kwon, 2019. "Optimal Strategies of Product Price, Quality, and Corporate Environmental Responsibility," IJERPH, MDPI, vol. 16(23), pages 1-24, November.
    • Handle: RePEc:gam:jijerp:v:16:y:2019:i:23:p:4704-:d:291028
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