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A CSR Product Differentiation Model with;Asymmetric Information

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Author Info

  • Leonardo BECCHETTI

    ()
    (Universita' di Roma "Tor Vergata")

  • Luisa GIALLONARDO

    ()
    (Universita' dell'Aquila)

  • Maria Elisabetta TESSITORE

    ()
    (Universita' di Roma "Tor Vergata")

Abstract

The bottom up pressure of "concerned" consumers and the rise of "socially responsible" products represents a new market mechanism to fight inequality and promote social inclusion. To analyse the new phenomenon of competition in corporate social responsibility (CSR) amid doubts on consumer tastes and of the effective corporate SR stance we adopt a horizontal differentiation approach in which the Hotelling segment is reinterpreted as the space of product SR characteristics and consumer tastes are uncertain. We find equilibria of the pure location and of the price-location games and show what changes when we move from a duopoly of profit maximizing producers to a mixed duopoly. Our findings illustrate that a nonzero degree of CSR is the optimal choice of profit maximizing corporations under reasonable parametric intervals of consumers' "costs of ethical distance", corporate cost of CSR and uncertainty about consumer tastes

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Bibliographic Info

Article provided by SIE - Societa' Italiana degli Economisti (I) in its journal Rivista Italiana degli Economisti.

Volume (Year): 15 (2010)
Issue (Month): 2 (August)
Pages: 209-236

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Handle: RePEc:rie:review:v:15:y:2010:i:2:n:2

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Related research

Keywords: Asymmetric Information; Corporate Social Responsibility; Product Differentiation;

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Cited by:
  1. Wirl, Franz & Feichtinger, Gustav & Kort, Peter M., 2013. "Individual firm and market dynamics of CSR activities," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 169-182.

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