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Welfare-improving cooperation with a consumer-friendly multiproduct corporation

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  • Garcia, Arturo
  • Leal, Mariel
  • Lee, Sang-Ho

Abstract

This paper considers a multiproduct corporation that adopts consumer-friendly activities and cooperates with single plant firms for improving welfare. Comparing competition and (full or partial) cooperation, we show that full cooperation is socially beneficial if products are strong complements, whereas partial cooperation with a higher consumer-friendly activities is beneficial if products are substitutes. We also examine a sequential choice game of endogenous cooperation in which the multiproduct corporation can induce cooperation and show that our findings are supportive at equilibrium. We finally compare different ownerships of the single plant firms and find that foreign ownership decreases the benefits of cooperation. Therefore, a cooperation with multiproduct corporation should be accompanied with active governmental guideline for promoting consumer friendly activities.

Suggested Citation

  • Garcia, Arturo & Leal, Mariel & Lee, Sang-Ho, 2020. "Welfare-improving cooperation with a consumer-friendly multiproduct corporation," MPRA Paper 98420, University Library of Munich, Germany, revised Jan 2020.
    • Handle: RePEc:pra:mprapa:98420
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    References listed on IDEAS

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    Cited by:

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    2. Arturo Garcia & Mariel Leal & Sang-Ho Lee, 2021. "Competitive CSR in a strategic managerial delegation game with a multiproduct corporation," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 68(3), pages 301-330, September.
    3. Kopel, Michael & Putz, Eva Maria, 2021. "Why socially concerned firms use low-powered managerial incentives: A complementary explanation," Economic Modelling, Elsevier, vol. 94(C), pages 473-482.
    4. Lili Xu & Fanrui Su & Sang-Ho Lee, 2023. "Strategic corporate social responsibility and partial privatization policy with foreign penetration," The Japanese Economic Review, Springer, vol. 74(2), pages 251-278, April.

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    More about this item

    Keywords

    consumer-friendly activities; full cooperation; partial cooperation; multiproduct corporation; welfare-improving cooperation;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations

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