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Corporate Environmentalism in Dynamic Oligopoly

Author

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  • Yanase, Akihiko

Abstract

This study investigates how an increase in the firms' environmental consciousness affects the environment and economic welfare in the presence of dynamic oligopolistic competition where firms' objective may include the society's damage from stock pollution as well as their profits. If all firms are symmetric, an increase in the environmental consciousness reduces consumer surplus and social welfare in the short-run. However, profits may increase if the firms are initially less environmentally conscious. The long-run effects are similar to the short-run ones except for the effect on social welfare because pollution stock is reduced in the steady state. In the case of asymmetric firms, an increase in the polluting firms' environmental consciousness reduces their output whereas it increases the clean firms' output. The clean firms become better off, but depending on the relative number of polluting firms versus clean firms, the polluting firms' profits may increase or decrease.

Suggested Citation

  • Yanase, Akihiko, 2013. "Corporate Environmentalism in Dynamic Oligopoly," Strategic Behavior and the Environment, now publishers, vol. 3(3), pages 223-250, March.
    • Handle: RePEc:now:jnlsbe:102.00000030
    DOI: 10.1561/102.00000030
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    Cited by:

    1. Bertrand Crettez & Naila Hayek & Peter M. Kort, 2021. "A Dynamic Multi-Objective Duopoly Game with Capital Accumulation and Pollution," Mathematics, MDPI, vol. 9(16), pages 1-34, August.
    2. Van Long, Ngo, 2016. "The Impacts of Other-Regarding Preferences and Ethical Choice on Environmental Outcomes: A Review of the Literature," Strategic Behavior and the Environment, now publishers, vol. 6(1-2), pages 1-35, December.

    More about this item

    Keywords

    Corporate environmentalism; Differential game; Environmental consciousness;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • 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

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