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Strategic Corporate Social Responsibility and Tariff Policies: The Timing of Commitments and Policy Implications

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  • Lili Xu
  • Fanrui Su
  • Sang‐Ho Lee

Abstract

In the context of international trade, we explore the role of strategic commitments by a local government concerning tariffs in the presence of firms’ corporate social responsibility (CSR) activities. We examine and compare committed tariff and time‐consistent tariff regimes when a domestic or foreign firm engages in CSR activities, respectively. We demonstrate that under domestic CSR, the committed tariff yields lower optimal tariffs and higher strategic CSR than the time‐consistent tariff, resulting in higher welfare and lower profits for the CSR firm. Under foreign CSR, when firms’ products are more independent (substitutable), the committed tariff results in lower (higher) optimal tariffs, higher (lower) strategic CSR, and higher (lower) welfare than the time‐consistent tariff. We also examine an endogenous choice of commitment and find that the committed tariff is a desirable equilibrium under domestic CSR, whereas the time‐consistent tariff may be a desirable equilibrium under foreign CSR when firms’ products are more independent.

Suggested Citation

  • Lili Xu & Fanrui Su & Sang‐Ho Lee, 2025. "Strategic Corporate Social Responsibility and Tariff Policies: The Timing of Commitments and Policy Implications," Bulletin of Economic Research, Wiley Blackwell, vol. 77(3), pages 281-294, July.
    • Handle: RePEc:bla:buecrs:v:77:y:2025:i:3:p:281-294
    DOI: 10.1111/boer.12487
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    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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