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Strategic merger decisions under environmental corporate social responsibility

Author

Listed:
  • Sumi Cho

    (Chonnam National University)

  • Sang-Ho Lee

    (Chonnam National University)

Abstract

This study investigates merger decisions in a green managerial delegation contract with differentiated products and convex production cost, wherein competing multi-product firms can commit to environmental corporate social responsibility (ECSR). We find that ECSR can induce a profitable merger, which may also improve welfare if the production cost efficiency parameter is low and product substitutability is high.

Suggested Citation

  • Sumi Cho & Sang-Ho Lee, 2025. "Strategic merger decisions under environmental corporate social responsibility," Economics Bulletin, AccessEcon, vol. 45(3), pages 1397-1405.
    • Handle: RePEc:ebl:ecbull:eb-25-00159
    as

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    References listed on IDEAS

    as
    1. Lee Sang-Ho & Park Chul-Hi, 2019. "Eco-Firms and the Sequential Adoption of Environmental Corporate Social Responsibility in the Managerial Delegation," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 19(1), pages 1-9, January.
    2. Lommerud, Kjell Erik & Sorgard, Lars, 1997. "Merger and product range rivalry," International Journal of Industrial Organization, Elsevier, vol. 16(1), pages 21-42, November.
    3. Xing Mingqing & Lee Sang-Ho, 2024. "The Strategic Adoption of Environmental Corporate Social Responsibility with Network Externalities," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 24(1), pages 399-418, January.
    4. Sumi Cho & Sang‐Ho Lee, 2024. "Cross ownership and environmental corporate social responsibility with environmental cooperation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(1), pages 446-468, January.
    5. Garcia, Arturo & Leal, Mariel & Lee, Sang-Ho & Park, Chul-Hi, 2024. "Merger incentive and strategic corporate social responsibility by a multiproduct corporation," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 193-206.
    6. John S. Heywood & Matthew McGinty, 2008. "Leading and Merging: Convex Costs, Stackelberg, and the Merger Paradox," Southern Economic Journal, John Wiley & Sons, vol. 74(3), pages 879-893, January.
    7. Xing, Mingqing & Lee, Sang-Ho, 2024. "Cross-ownership and strategic environmental corporate social responsibility under price competition," Environment and Development Economics, Cambridge University Press, vol. 29(3), pages 234-256, June.
    8. Bárcena-Ruiz, Juan Carlos & Garzón, María Begoña & Sagasta, Amagoia, 2023. "Environmental corporate social responsibility, R&D and disclosure of “green” innovation knowledge," Energy Economics, Elsevier, vol. 120(C).
    9. Buccella, Domenico & Fanti, Luciano & Gori, Luca, 2021. "To abate, or not to abate? A strategic approach on green production in Cournot and Bertrand duopolies," Energy Economics, Elsevier, vol. 96(C).
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    12. Juan Alejandro Gelves, 2010. "Horizontal Merger With An Inefficient Leader," Manchester School, University of Manchester, vol. 78(5), pages 379-394, September.
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    17. Luis Gautier & Mahelet G. Fikru, 2024. "Mergers in Cournot Markets with Environmental Externality and Product Differentiation," Natural Resource Management and Policy, in: Handbook of Merger Control and Environmental Policy, chapter 0, pages 21-46, Springer.
    18. Hirose, Kosuke & Matsumura, Toshihiro, 2022. "Common ownership and environmental Corporate Social Responsibility," Energy Economics, Elsevier, vol. 114(C).
    19. Kosuke Hirose & Sang-Ho Lee & Toshihiro Matsumura, 2020. "Noncooperative and Cooperative Environmental Corporate Social Responsibility," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 176(3), pages 549-571.
    20. Levin, Dan, 1990. "Horizontal Mergers: The 50-Percent Benchmark," American Economic Review, American Economic Association, vol. 80(5), pages 1238-1245, December.
    21. Luis Gautier & Mahelet G. Fikru, 2024. "Merger Control and Environmental Policy," Natural Resource Management and Policy, in: Handbook of Merger Control and Environmental Policy, chapter 0, pages 177-184, Springer.
    22. Perry, Martin K & Porter, Robert H, 1985. "Oligopoly and the Incentive for Horizontal Merger," American Economic Review, American Economic Association, vol. 75(1), pages 219-227, March.
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    Keywords

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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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