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Network externalities and corporate social responsibility

Author

Listed:
  • Luciano Fanti

    () (Department of Economics and Management, University of Pisa)

  • Domenico Buccella

    () (Department of Economics, Kozminski University)

Abstract

This paper examines a duopoly market with Corporate Social Responsibility (CSR) firms (sensitive to consumer surplus). It is shown that, in contrast to the conventional result that the higher the weight on CSR the lower the firms' profitability, when network externalities in consumption are present even the firms' profitability may be enhanced by the presence of social concerns. This finding opens a new view of CSR rules by the most worldwide engaged in social activities firms that operate in the more and more increasing sectors of network goods.

Suggested Citation

  • Luciano Fanti & Domenico Buccella, 2016. "Network externalities and corporate social responsibility," Economics Bulletin, AccessEcon, vol. 36(4), pages 2043-2050.
  • Handle: RePEc:ebl:ecbull:eb-16-00246
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    File URL: http://www.accessecon.com/Pubs/EB/2016/Volume36/EB-16-V36-I4-P200.pdf
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    References listed on IDEAS

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    1. Chirco, Alessandra & Scrimitore, Marcella, 2013. "Choosing price or quantity? The role of delegation and network externalities," Economics Letters, Elsevier, vol. 121(3), pages 482-486.
    2. Goering, Gregory E., 2008. "Welfare impacts of a non-profit firm in mixed commercial markets," Economic Systems, Elsevier, vol. 32(4), pages 326-334, December.
    3. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    4. Luciano Fanti & Domenico Buccella, 2016. "Bargaining Agenda and Entry in a Unionised Model with Network Effects," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 2(1), pages 91-121, March.
    5. Bhattacharjee Trishita & Pal Rupayan, 2014. "Network Externalities and Strategic Managerial Delegation in Cournot Duopoly: Is There a Prisoners’ Dilemma?," Review of Network Economics, De Gruyter, vol. 12(4), pages 343-353, January.
    6. 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, March.
    7. David P. Baron, 2009. "A Positive Theory of Moral Management, Social Pressure, and Corporate Social Performance," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 7-43, March.
    8. Hoernig, Steffen, 2012. "Strategic delegation under price competition and network effects," Economics Letters, Elsevier, vol. 117(2), pages 487-489.
    9. Kopel, Michael & Brand, Björn, 2012. "Socially responsible firms and endogenous choice of strategic incentives," Economic Modelling, Elsevier, vol. 29(3), pages 982-989.
    10. De Fraja, Giovanni, 1993. "Unions and Wages in Public and Private Firms: A Game-Theoretic Analysis," Oxford Economic Papers, Oxford University Press, vol. 45(3), pages 457-469, July.
    11. Gregory E. Goering, 2007. "The strategic use of managerial incentives in a non-profit firm mixed duopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 83-91.
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    Cited by:

    1. repec:ebl:ecbull:eb-18-00335 is not listed on IDEAS
    2. Arturo Garcia & Mariel Leal & Sang-Ho Lee, 2018. "Social responsibility in a bilateral monopoly with R&D," Economics Bulletin, AccessEcon, vol. 38(3), pages 1467-1475.
    3. repec:ebl:ecbull:eb-18-00167 is not listed on IDEAS

    More about this item

    Keywords

    CSR; network effects; duopoly.;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

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