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Private CSR Activities in Oligopolistic Markets: Is there any room for Regulation?

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Author Info
Evangelos Mitrokostas () (Department of Economics, University of Crete)
Emmanuel Petrakis () (Department of Economics, University of Crete, Greece)

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Abstract

The present paper examines the conditions under which the regulator can complement the provision of Corporate Social Responsibility (CSR) activities by private firms in an oligopolistic market. Our main finding is that if there is no credible information disclosure about SR characteristics of the firms' products to consumers, no firm will have incentives to undertake CSR effort in equilibrium. However, if the necessary information about the CSR aspects of each firm's product, otherwise unobservable, is made available to consumers through certification provided either by a profit-maximizing certifier or by the regulator, then both firms will have incentives to engage in CSR activities. Hence in equilibrium, consumers' surplus, firms profits and total welfare increase comparing to the benchmark case without CSR activities.

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File URL: http://economics.soc.uoc.gr/wpa/docs/csr_regulation_2008_06.pdf
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Publisher Info
Paper provided by University of Crete, Department of Economics in its series Working Papers with number 0816.

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Date of creation: 17 Jun 2008
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Handle: RePEc:crt:wpaper:0816

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Related research
Keywords: Corporate Social Responsibility; Oligopoly; Vertical Differentiation; Certification.;

Find related papers by JEL classification:
M14 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Corporate Culture; Social Responsibility
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
L5 - Industrial Organization - - Regulation and Industrial Policy

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Abagail McWilliams & Donald S. Siegel & Patrick M. Wright, 2006. "Corporate Social Responsibility: Strategic Implications," Journal of Management Studies, Blackwell Publishing, vol. 43(1), pages 1-18, 01. [Downloadable!] (restricted)
    Other versions:
  2. Soham Baksi & Pinaki Bose, 2007. "Credence Goods, Efficient Labelling Policies, and Regulatory Enforcement," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 37(2), pages 411-430, June. [Downloadable!] (restricted)
  3. Constantine Manasakis & Evangelos Mitrokostas & Emmanuel Petrakis, 2006. "Corporate Social Responsibility in Oligopoly," Working Papers 0707, University of Crete, Department of Economics, revised 15 Jan 2007. [Downloadable!]
  4. David P. Baron, 2001. "Private Politics, Corporate Social Responsibility, and Integrated Strategy," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 10(1), pages 7-45, 03. [Downloadable!] (restricted)
  5. Paolo Garella & Emmanuel Petrakis, 2005. "Minimum Quality Standards and Consumers Information," Working Papers 0510, University of Crete, Department of Economics. [Downloadable!]
    Other versions:
  6. Aleix Calveras & Juan-JosÉ Ganuza & Gerard Llobet, 2007. "Regulation, Corporate Social Responsibility and Activism," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 16(3), pages 719-740, 09. [Downloadable!] (restricted)
  7. 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. [Downloadable!] (restricted)
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  8. Aurora García-Gallego & Nikolaos Georgantzís, 2009. "Market Effects of Changes in Consumers' Social Responsibility," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 18(1), pages 235-262, 03. [Downloadable!] (restricted)
  9. Marcus Alexander & Matthew C. Harding, 2003. "Self-regulation and the Certification of the European Information Economy The Case of e-Healthcare Information Provision," Economics Series Working Papers 154, University of Oxford, Department of Economics. [Downloadable!]
  10. Mark Bagnoli & Susan G. Watts, 2003. "Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 12(3), pages 419-445, 09. [Downloadable!] (restricted)
  11. Colin Mayer, 1999. "Firm Control," OFRC Working Papers Series 1999fe07, Oxford Financial Research Centre. [Downloadable!]
  12. David P. Baron, 2003. "Private Politics," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 12(1), pages 31-66, 03. [Downloadable!] (restricted)
  13. Crampes, Claude & Hollander, Abraham, 1995. "Duopoly and quality standards," European Economic Review, Elsevier, vol. 39(1), pages 71-82, January. [Downloadable!] (restricted)
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  14. Fluet, Claude & Garella, Paolo G., 2002. "Advertising and prices as signals of quality in a regime of price rivalry," International Journal of Industrial Organization, Elsevier, vol. 20(7), pages 907-930, September. [Downloadable!] (restricted)
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  15. Andrew F. Daughety & Jennifer F. Reinganum, 2005. "Imperfect Competition and Quality Signaling," Working Papers 0520, Department of Economics, Vanderbilt University. [Downloadable!]
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  16. Olivier Bonroy & Christos Constantatos, 2008. "On the use of labels in credence goods markets," Journal of Regulatory Economics, Springer, vol. 33(3), pages 237-252, June. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Bonroy, O. & Lemarie, S., 2008. "Downstream labeling and upstream competition," Working Papers 200804, Grenoble Applied Economics Laboratory (GAEL). [Downloadable!]
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