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Strategic CSR in Asymmetric Cournot Duopoly

Author

Listed:
  • Lisa Planer-Friedrich

    (Otto-Friedrich-Universität Bamberg)

  • Marco Sahm

    (Otto-Friedrich-Universität Bamberg
    CESifo)

Abstract

We examine the strategic use of corporate social responsibility (CSR) in Cournot competition between two firms that differ in their marginal costs of production. The level of CSR determines the weight a firm puts on consumer surplus in its objective function before it decides upon supply. We show that the more efficient firm chooses a higher CSR level, reinforcing its dominant position. If there are sufficiently large fixed costs of CSR, only the more efficient firm will engage in CSR.

Suggested Citation

  • Lisa Planer-Friedrich & Marco Sahm, 2021. "Strategic CSR in Asymmetric Cournot Duopoly," Journal of Industry, Competition and Trade, Springer, vol. 21(1), pages 33-42, March.
    • Handle: RePEc:kap:jincot:v:21:y:2021:i:1:d:10.1007_s10842-020-00335-3
    DOI: 10.1007/s10842-020-00335-3
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    References listed on IDEAS

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    Cited by:

    1. Jumpei Hamamura & Vinay Ramani, 2023. "Social performance versus relative performance evaluation, asymmetric costs, and quantity competition under managerial delegation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(3), pages 1706-1719, April.
    2. Yasuhiko Nakamura, 2022. "Corporate social responsibility focusing on consumer surplus and endogenous competition structure: A case of managerial delegation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 3000-3018, October.
    3. Vrankić Ilko, 2022. "Conflict and Corporate Social Responsibility in Duopoly," Business Systems Research, Sciendo, vol. 13(3), pages 36-46, October.
    4. Domenico Buccella & Luciano Fanti & Luca Gori, 2023. "Strategic product compatibility in network industries," Journal of Economics, Springer, vol. 140(2), pages 141-168, October.
    5. Buccella, Domenico & Fanti, Luciano & Gori, Luca, 2024. "Corporate Social Responsibility: A theory of the firm revisited with environmental issues," GLO Discussion Paper Series 1421, Global Labor Organization (GLO).
    6. Candel-Sánchez, Francisco & Perote-Peña, Juan, 2024. "How does corporate altruism affect oligopolistic competition?," Economic Modelling, Elsevier, vol. 135(C).

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    More about this item

    Keywords

    Corporate social responsibility; Cournot duopoly; Asymmetric costs; Heterogenous firms;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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