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Corporate Social Responsibility in Oligopoly

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Author Info

  • Constantine Manasakis

    ()
    (Department of Economics, University of Crete, Greece)

  • Evangelos Mitrokostas

    ()
    (Department of Economics, University of Crete)

  • Emmanuel Petrakis

    ()
    (Department of Economics, University of Crete, Greece)

Abstract

This paper studies firms owners' incentives to engage in Corporate Social Responsibility (CSR) activities in an oligopolistic market, in a strategic delegation and vertical product differentiation context. Firms' owners have the opportunity to hire "socially responsible" managers and delegate to them CSR effort and market competition decisions. In equilibrium, both owners employ socially responsible managers. The strategic behavior of owners to hire socially responsible managers increases both output and profits. The societal consequences of Corporate Social Responsibility are also discussed.

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File URL: http://economics.soc.uoc.gr/wpa/docs/CSR_olig_02_07_f.pdf
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Bibliographic Info

Paper provided by University of Crete, Department of Economics in its series Working Papers with number 0707.

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Length: 22 pages
Date of creation: 10 Jun 2006
Date of revision: 15 Jan 2007
Handle: RePEc:crt:wpaper:0707

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Related research

Keywords: Oligopoly; Vertical Product Differentiation; Corporate Social Responsibility; Strategic Managerial D;

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References

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  1. Catherine J. Morrison-Paul & Donald S. Siegel, 2006. "Corporate Social Responsibility and Economic Performance," Rensselaer Working Papers in Economics 0605, Rensselaer Polytechnic Institute, Department of Economics.
  2. Nolan Miller & Amit Pazgal, 2002. "Relative performance as a strategic commitment mechanism," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(2), pages 51-68.
  3. Bénabou, Roland & Tirole, Jean, 2003. "Incentives and Prosocial Behavior," IDEI Working Papers 389, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jan 2006.
  4. Mark Bagnoli & Susan G. Watts, 2003. "Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(3), pages 419-445, 09.
  5. Paolo Garella & Emmanuel Petrakis, 2008. "Minimum quality standards and consumers’ information," Economic Theory, Springer, vol. 36(2), pages 283-302, August.
  6. Katz, Michael L., 1991. "Game-Playing Agents: Unobservable Contracts as Precommitments," Department of Economics, Working Paper Series qt79b870w0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  7. Donald S. Siegel & Donald F. Vitaliano, 2006. "An Empirical Analysis of the Strategic Use of Corporate Social Responsibility," Rensselaer Working Papers in Economics 0602, Rensselaer Polytechnic Institute, Department of Economics.
  8. Baron, David P., 2001. "Private Politics," Research Papers 1689, Stanford University, Graduate School of Business.
  9. David P. Baron, 2003. "Private Politics," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(1), pages 31-66, 03.
  10. Levent Kockese & Efe A. Ok, 2002. "Strategic delegation by unobservable incentive contracts," Discussion Papers 0102-26, Columbia University, Department of Economics.
  11. Leonardo Becchetti & Luisa Giallonardo & Elisabetta Tessitore, 2006. "Consumer driven market mechanisms to fight inequality: the case of CSR/product differentiation models with asymmetric information," Working Papers 50, ECINEQ, Society for the Study of Economic Inequality.
  12. Abagail McWilliams & Donald S. Siegel & Patrick M. Wright, 2005. "Corporate Social Responsibility: Strategic Implications," Rensselaer Working Papers in Economics 0506, Rensselaer Polytechnic Institute, Department of Economics.
  13. Hackner, Jonas, 2000. "A Note on Price and Quantity Competition in Differentiated Oligopolies," Journal of Economic Theory, Elsevier, vol. 93(2), pages 233-239, August.
  14. Aleix Calveras & Juan-JosÉ Ganuza & Gerard Llobet, 2007. "Regulation, Corporate Social Responsibility and Activism," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(3), pages 719-740, 09.
  15. Miller, Nolan H & Pazgal, Amit I, 2001. "The Equivalence of Price and Quantity Competition with Delegation," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 284-301, Summer.
  16. Fershtman, Chaim & Judd, Kenneth L, 1987. "Equilibrium Incentives in Oligopoly," American Economic Review, American Economic Association, vol. 77(5), pages 927-40, December.
  17. Vickers, John, 1985. "Delegation and the Theory of the Firm," Economic Journal, Royal Economic Society, vol. 95(380a), pages 138-47, Supplemen.
  18. Miller, Nolan H. & Pazgal, Amit, 2005. "Strategic trade and delegated competition," Journal of International Economics, Elsevier, vol. 66(1), pages 215-231, May.
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Citations

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Cited by:
  1. L. Lambertini & A. Tampieri, 2011. "Corporate Social Responsibility and Firms Ability to Collude," Working Papers wp778, Dipartimento Scienze Economiche, Universita' di Bologna.
  2. Evangelos Mitrokostas & Emmanuel Petrakis, 2008. "Private CSR Activities in Oligopolistic Markets: Is there any room for Regulation?," Working Papers 0816, University of Crete, Department of Economics.
  3. Leonardo Becchetti & Benjamin Huybrechts, 2008. "The Dynamics of Fair Trade as a Mixed-form Market," Journal of Business Ethics, Springer, vol. 81(4), pages 733-750, September.
  4. Becchetti Leonardo & Giorgio Federico & Solferino Nazaria, 2011. "What to do in globalised economies if global governance is missing? The vicarious role of competition in social responsibility," International Review of Economics, Springer, vol. 58(2), pages 185-211, June.
  5. Claudia Alves & Luís Santos-Pinto, 2008. "A Theory of Corporate Social Responsibility in Oligopolistic Markets," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 09.04, Université de Lausanne, Faculté des HEC, DEEP.
  6. Markus Kitzmueller, 2008. "Economics and Corporate Social Responsibility," Economics Working Papers ECO2008/37, European University Institute.

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