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The Role of Socially Concerned Consumers in the Coexistence of Ethical and Standard Firms

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  • Fanelli, Domenico

Abstract

The purpose of this paper is to investigate how socially concerned consumers' preferences affects firms' decisions to commit to social responsibility. In a market in which firms face the same demand function and products are homogeneous, we find that a large group of socially concerned consumers or a low cost of social responsibility induces an equilibrium outcome in which ethical and standard firms coexists in the same market. Our result is relevant because we do not assume a product differentiation setup and firms do not separate the market through labeling schemes.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 20117.

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Date of creation: 18 Jan 2010
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Handle: RePEc:pra:mprapa:20117

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Keywords: CSR; Price Competition; Duopoly; ESS; Replicator Dynamics;

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  1. Drew Fudenberg & David K. Levine, 1998. "Learning in Games," Levine's Working Paper Archive 2222, David K. Levine.
  2. Burkhard Hehenkamp & Wolfgang Leininger, 1999. "A note on evolutionary stability of Bertrand equilibrium," Journal of Evolutionary Economics, Springer, vol. 9(3), pages 367-371.
  3. 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.
  4. Markus Kitzmueller, 2008. "Economics and Corporate Social Responsibility," Economics Working Papers ECO2008/37, European University Institute.
  5. Ronald B. Davies, 2000. "Abstinence from Child Labor and Profit Seeking," University of Oregon Economics Department Working Papers 2000-1, University of Oregon Economics Department, revised 01 Aug 2002.
  6. Klaus Conrad, 2005. "Price Competition and Product Differentiation When Consumers Care for the Environment," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 31(1), pages 1-19, 05.
  7. 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.
  8. Motta, Massimo, 1993. "Endogenous Quality Choice: Price vs. Quantity Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 113-31, June.
  9. Immordino Giovanni, 2008. "Fairness, Consumer Consciousness and the Welfare of Less Developed Countries," Global Economy Journal, De Gruyter, vol. 8(1), pages 1-21, February.
  10. 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.
  11. J. Hofbauer & P. Schuster & K. Sigmund, 2010. "A Note on Evolutionary Stable Strategies and Game Dynamics," Levine's Working Paper Archive 441, David K. Levine.
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