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Certification of Corporate Social Responsibility Activities in Oligopolistic Markets

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  • 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

We investigate the impact of alternative certifying institutions on firms' incentives to engage in costly Corporate Social Responsibility (CSR) activities as well as their relative market and societal implications. We find that the CSR certification standard is the lowest under a for-profit private certifier and the highest under a Non Governmental Organization (NGO), with the standard of a welfare maximizing public certifier lying in between. Yet, regarding industry output, this ranking is reversed. Certification of CSR activities is welfare enhancing for consumers and firms and thus should be encouraged. Finally, depending on whether certification takes place before or after firms' CSR activities, a public certifier and a NGO lead to different market and societal outcomes.

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

Paper provided by University of Crete, Department of Economics in its series Working Papers with number 1103.

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Date of creation: 29 Mar 2011
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Handle: RePEc:crt:wpaper:1103

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Keywords: Corporate Social Responsibility; Oligopoly; Vertical Differentiation; Certification;

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  1. Bénabou, Roland & Tirole, Jean, 2009. "Individual and Corporate Social Responsibility," TSE Working Papers 09-109, Toulouse School of Economics (TSE).
  2. Constantine Manasakis & Evangelos Mitrokostas & Emmanuel Petrakis, 2012. "Certification of Corporate Social Responsibility Activities in Oligopolistic Markets," Working Papers 2012/06, Economics Department, Universitat Jaume I, Castellón (Spain).
  3. Bonroy, O. & Constantatos, C., 2007. "On the use of labels in credence goods markets," Working Papers 200709, Grenoble Applied Economics Laboratory (GAEL).
  4. Petrakis, Emmanuel & Xepapadeas, Anastasios, 2003. "Location decisions of a polluting firm and the time consistency of environmental policy," Resource and Energy Economics, Elsevier, vol. 25(2), pages 197-214, May.
  5. Jonathan P. Doh & Terrence R. Guay, 2006. "Corporate Social Responsibility, Public Policy, and NGO Activism in Europe and the United States: An Institutional-Stakeholder Perspective," Journal of Management Studies, Wiley Blackwell, vol. 43(1), pages 47-73, 01.
  6. Paolo Garella & Emmanuel Petrakis, 2005. "Minimum Quality Standards and Consumers Information," Working Papers 0510, University of Crete, Department of Economics.
  7. Thomas Bue Bjorner & Lars Garn Hansen & Clifford S. Russell, 2002. "Environmental Labelling and Consumer's Choice - An Empirical Analysis of the Effect of the Nordic Swan," Vanderbilt University Department of Economics Working Papers 0203, Vanderbilt University Department of Economics.
  8. Laura T. Raynolds & Douglas Murray & Peter Leigh Taylor, 2004. "Fair trade coffee: building producer capacity via global networks," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(8), pages 1109-1121.
  9. Amacher, Gregory S. & Koskela, Erkki & Ollikainen, Markku, 2004. "Environmental quality competition and eco-labeling," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 284-306, March.
  10. 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.
  11. David P. Baron, 2001. "Private Politics, Corporate Social Responsibility, and Integrated Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 7-45, 03.
  12. Brisley, Neil & Bris, Arturo & Cabolis, Christos, 2011. "A theory of optimal expropriation, mergers and industry competition," Journal of Banking & Finance, Elsevier, vol. 35(4), pages 955-965, April.
  13. Bottega Lucie & Delacote Philippe & Ibanez Lisette, 2009. "Labeling Policies and Market Behavior: Quality Standard and Voluntary Label Adoption," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 7(2), pages 1-18, December.
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Cited by:
  1. Constantine Manasakis & Evangelos Mitrokostas & Emmanuel Petrakis, 2011. "Certification of Corporate Social Responsibility Activities in Oligopolistic Markets," Working Papers 1103, University of Crete, Department of Economics.
  2. Bonroy, O. & Constantatos, C., 2013. "On the economics of labels : a review of the theoretical literature," Working Papers 2013-01, Grenoble Applied Economics Laboratory (GAEL).

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