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Corporate social responsibility and privatization policy in a mixed oligopoly

Author

Listed:
  • Seung-Leul Kim

    (Wonkwang University)

  • Sang-Ho Lee

    (Chonnam National University)

  • Toshihiro Matsumura

    (The University of Tokyo)

Abstract

This article formulates a mixed oligopoly in which a public firm competes with two private firms that may adopt corporate social responsibility (CSR). We then determine the optimal privatization policy and find that, depending on CSR level and cost differences among firms, either nationalization or full privatization can be optimal. For identical cost functions, we also show the optimal degree of privatization is decreasing with the level of CSR if private firms are homogeneous, while it is non-monotone with the CSR level in a significant heterogeneity of objectives among the firms. Our analysis suggests that CSR activities that affect the magnitude of heterogeneity among firms are crucial in choosing an optimal privatization policy in a mixed oligopoly.

Suggested Citation

  • Seung-Leul Kim & Sang-Ho Lee & Toshihiro Matsumura, 2019. "Corporate social responsibility and privatization policy in a mixed oligopoly," Journal of Economics, Springer, vol. 128(1), pages 67-89, September.
    • Handle: RePEc:kap:jeczfn:v:128:y:2019:i:1:d:10.1007_s00712-018-00651-7
    DOI: 10.1007/s00712-018-00651-7
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    More about this item

    Keywords

    Corporate social responsibility; Mixed oligopoly; Partial privatization; Nationalization; Full privatization;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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