Building a reputation as a socially responsible firm
AbstractMany of the attributes that make a good "socially responsible" are credence attributes that cannot be learned by consumers either through search or experience. Consumers aggregate information about them from several channels (media, advertisement, NGOs, etc.). Since these sources may send contradictory messages, the information available to consumers is noisy. In this paper we model such informational environment and show the positive relationship between the accuracy of the information transmitted to consumers and CSR. We also show that firms may be tempted to adding noise to the information channel (e.g., through lobbying of the media), which might reduce the supply of the credence attributes and even harm firms themselves. As a consequence, firms might find profitable, for instance by means of forming a partnership with an NGO, to commit to not manipulate the information. Finally, we also show that such self-commitment by firms is a strategic substitute of transparency regulation by the public sector.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1421.
Date of creation: May 2014
Date of revision:
Contact details of provider:
Web page: http://www.econ.upf.edu/
credence good; information asymmetry; corporate social responsibility; regulation;
Find related papers by JEL classification:
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- M14 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
- Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Costs; Distributional Effects; Employment Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-06-14 (All new papers)
- NEP-CTA-2014-06-14 (Contract Theory & Applications)
- NEP-MKT-2014-06-14 (Marketing)
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.:
- Douglas W. Diamond, 1998.
"Reputation Acquisition in Debt Markets,"
Levine's Working Paper Archive
602, David K. Levine.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
- Crawford, Vincent P & Sobel, Joel, 1982.
"Strategic Information Transmission,"
Econometric Society, vol. 50(6), pages 1431-51, November.
- Jacob Glazer & Ariel Rubinstein, 2004. "On Optimal Rules of Persuasion," Econometrica, Econometric Society, vol. 72(6), pages 1715-1736, November.
- David P. Baron, 2003. "Private Politics," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(1), pages 31-66, 03.
- 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.
- Lucie Bottega & Jenny De Freitas, 2009.
"Public, Private and Nonprofit Regulation for Environmental Quality,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 18(1), pages 105-123, 03.
- Lucie Bottega & Jenny De Freitas, 2009. "Public, private and nonprofit regulation for environmental quality," DEA Working Papers 33, Universitat de les Illes Balears, Departament d'Economía Aplicada.
- Mark Bagnoli & Ted Bergstrom, 2005.
"Log-concave probability and its applications,"
Springer, vol. 26(2), pages 445-469, 08.
- David P. Baron, 2005. "Competing for the Public Through the News Media," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(2), pages 339-376, 06.
- Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-83, December.
- Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-29, March-Apr.
- anonymous, 2002. "Regional approaches to economic development," Community Reinvestment, Federal Reserve Bank of Kansas City, issue Win.
- Timothy J. Feddersen & Thomas W. Gilligan, 2001. "Saints and Markets: Activists and the Supply of Credence Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 149-171, 03.
- Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
- Besley, Timothy & Ghatak, Maitreesh, 2007. "Retailing public goods: The economics of corporate social responsibility," Journal of Public Economics, Elsevier, vol. 91(9), pages 1645-1663, September.
- Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.