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Strategic Environmental Corporate Social Responsibility (ECSR) Certification and Endogenous Market Structure

Author

Listed:
  • Sharma Ajay

    (Department of Economics, Indian Institute of Management Indore, Prabandh Shikhar, Rau-Pithampur Road, 453556, Indore, Madhya Pradesh, India)

  • Rastogi Siddhartha

    (Department of Economics, Indian Institute of Management Indore, Prabandh Shikhar, Rau-Pithampur Road, 453556, Indore, Madhya Pradesh, India)

Abstract

This paper extends the findings of Liu, Wang, and Lee (2015. “Strategic Environmental Corporate Social Responsibility in a Differentiated Duopoly Market.” Economics Letters 129: 108–11), along two dimensions. First, we consider the case of endogenous market structure a la Singh and Vives (1984. “Price and Quantity Competition in a Differentiated Duopoly.” The RAND Journal of Economics: 546–54). Second, we refine the ECSR certification standards in differentiated duopoly with analysis of both uniform and discriminating standards. We find that NGO certifier will set the ECSR standards below the optimal level. We show that given the ECSR certification standards, there is a possibility of both price and quantity contracts choices by the firms in endogenous market structure. Additionally, we highlight the market structures emerging due to uniform and discriminating ECSR standards.

Suggested Citation

  • Sharma Ajay & Rastogi Siddhartha, 2024. "Strategic Environmental Corporate Social Responsibility (ECSR) Certification and Endogenous Market Structure," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 24(1), pages 419-433, January.
    • Handle: RePEc:bpj:bejtec:v:24:y:2024:i:1:p:419-433:n:1
    DOI: 10.1515/bejte-2022-0139
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    1. Auriol, Emmanuelle & Schilizzi, Steven G.M., 2015. "Quality signaling through certification in developing countries," Journal of Development Economics, Elsevier, vol. 116(C), pages 105-121.
    2. Liu, Chih-Chen & Wang, Leonard F.S. & Lee, Sang-Ho, 2015. "Strategic environmental corporate social responsibility in a differentiated duopoly market," Economics Letters, Elsevier, vol. 129(C), pages 108-111.
    3. Constantine Manasakis & Evangelos Mitrokostas & Emmanuel Petrakis, 2013. "Certification of corporate social responsibility activities in oligopolistic markets," Canadian Journal of Economics, Canadian Economics Association, vol. 46(1), pages 282-309, February.
    4. Seung-Leul Kim & Sang-Ho Lee & Toshihiro Matsumura, 2019. "Corporate social responsibility and privatization policy in a mixed oligopoly," Journal of Economics, Springer, vol. 128(1), pages 67-89, September.
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    More about this item

    Keywords

    corporate social responsibility certification; differentiated duopoly; environmental standards; mixed markets; price competition; quantity competition;
    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
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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