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Strategic CSR and merger decisions in multiproduct mixed markets with state-holding corporation

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  • Leal, Mariel
  • García, Arturo
  • Lee, Sang-Ho

Abstract

We consider mixed markets with two differentiated products, comprised of a state holding corporation (SHC) and private firms, which decide strategic corporate social responsibility (CSR) and merger between the multiple plants. In the managerial delegation model, we show that the level of unilateral CSR by a single plant under merger is higher than that under non-merger, but merged (non-merged) private firms can generate higher social welfare when products are low (high) substitutes. We also show that competitive level of bilateral CSR is lower than that of unilateral CSR under non-merger competition. We then show that partial privatization is always optimal regardless of merger decisions, but its degree under merger is lower than that under non-merger. Finally, we examine CSR-firm’s strategic alliance and its policy implications if the merger is not voluntarily supportive.

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  • Leal, Mariel & García, Arturo & Lee, Sang-Ho, 2021. "Strategic CSR and merger decisions in multiproduct mixed markets with state-holding corporation," International Review of Economics & Finance, Elsevier, vol. 72(C), pages 319-333.
  • Handle: RePEc:eee:reveco:v:72:y:2021:i:c:p:319-333
    DOI: 10.1016/j.iref.2020.12.001
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    1. Chuyuan Zhang & Sang‐Ho Lee, 2023. "Foreign passive ownership and tariff‐induced free technology transfer under vertical integration," Manchester School, University of Manchester, vol. 91(2), pages 89-117, March.
    2. Samreen Hamid & Asif Saeed & Umar Farooq & Faisal Alnori, 2022. "A Bibliometric Retrospection of CSR from the Lens of Finance and Economics: Towards Sustainable Development," Sustainability, MDPI, vol. 14(24), pages 1-25, December.
    3. Lili Xu & Fanrui Su & Sang-Ho Lee, 2023. "Strategic corporate social responsibility and partial privatization policy with foreign penetration," The Japanese Economic Review, Springer, vol. 74(2), pages 251-278, April.

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    More about this item

    Keywords

    Strategic corporate social responsibility; Merger; Mixed market; State holding corporation;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing

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