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Certification of corporate social responsibility activities in oligopolistic markets

  • Constantine Manasakis
  • Evangelos Mitrokostas
  • Emmanuel Petrakis

We investigate the impact of alternative certifying institutions on firms' incentives to engage in costly Corporate Social Responsibility (CSR) activities as well as their relative market and societal implications. We find that the CSR certification standard is the lowest under for-profit private certifiers and the highest under a Non Governmental Organization (NGO), with the standard of a welfare-maximizing public certifier lying in between. Yet, regarding industry output, this ranking is reversed. Certification of CSR activities is welfare enhancing for consumers and firms and should be encouraged. Finally, the market and societal outcomes of CSR certification depend crucially on whether certification takes place before or after firms' CSR activities.

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Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 46 (2013)
Issue (Month): 1 (February)
Pages: 282-309

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Handle: RePEc:cje:issued:v:46:y:2013:i:1:p:282-309
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  1. David P. Baron, 2001. "Private Politics, Corporate Social Responsibility, and Integrated Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 7-45, 03.
  2. Constantine Manasakis & Evangelos Mitrokostas & Emmanuel Petrakis, 2011. "Certification of Corporate Social Responsibility Activities in Oligopolistic Markets," Working Papers 1103, University of Crete, Department of Economics.
  3. Bonroy, O. & Constantatos, C., 2007. "On the use of labels in credence goods markets," Working Papers 200709, Grenoble Applied Economics Laboratory (GAEL).
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  7. Soham Baksi & Pinaki Bose, 2007. "Credence Goods, Efficient Labelling Policies, and Regulatory Enforcement," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 37(2), pages 411-430, June.
  8. Laura T. Raynolds & Douglas Murray & Peter Leigh Taylor, 2004. "Fair trade coffee: building producer capacity via global networks," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(8), pages 1109-1121.
  9. Paolo G. GARELLA & Emmanuel PETRAKIS, 2007. "Minimum quality standards and consumers’ information," Departmental Working Papers 2007-12, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  10. Bénabou, Roland & Tirole, Jean, 2009. "Individual and Corporate Social Responsibility," TSE Working Papers 09-109, Toulouse School of Economics (TSE).
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  12. Petrakis, Emmanuel & Xepapadeas, Anastasios, 2003. "Location decisions of a polluting firm and the time consistency of environmental policy," Resource and Energy Economics, Elsevier, vol. 25(2), pages 197-214, May.
  13. Bottega Lucie & Delacote Philippe & Ibanez Lisette, 2009. "Labeling Policies and Market Behavior: Quality Standard and Voluntary Label Adoption," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 7(2), pages 1-18, December.
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