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Convex costs and profitability of corporate social responsibility in network industries

Author

Listed:
  • Luciano Fanti

    (University of Pisa)

  • Domenico Buccella

    (Kozminski University)

Abstract

In a duopoly model with linear costs, Fanti and Buccella (2018, International Review of Economics) show that, for sufficiently intense network externalities, the equilibrium in which both firms have social concerns is more profitable than simple profit-seeking. This note shows that, with convex costs, firms competing non-cooperatively on the level of Corporate social responsibility (CSR) may increase or decrease their social engagement depending on the network effect. However, high costs (for instance due to inefficient technologies or strong input suppliers) tend to favour the appearance of the profitability of the CSR choices.

Suggested Citation

  • Luciano Fanti & Domenico Buccella, 2023. "Convex costs and profitability of corporate social responsibility in network industries," Economics Bulletin, AccessEcon, vol. 43(2), pages 962-967.
    • Handle: RePEc:ebl:ecbull:eb-23-00135
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    References listed on IDEAS

    as
    1. 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.
    2. Luciano Fanti & Domenico Buccella, 2018. "Profitability of corporate social responsibility in network industries," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 65(3), pages 271-289, September.
    3. Kopel, Michael & Lamantia, Fabio & Szidarovszky, Ferenc, 2014. "Evolutionary competition in a mixed market with socially concerned firms," Journal of Economic Dynamics and Control, Elsevier, vol. 48(C), pages 394-409.
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    6. Lisa Planer-Friedrich & Marco Sahm, 2020. "Strategic corporate social responsibility, imperfect competition, and market concentration," Journal of Economics, Springer, vol. 129(1), pages 79-101, January.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Corporate social responsibility; network effects; duopoly.;
    All these keywords.

    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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