R&D timing when CSR aware firms engage in a research joint venture

We analyze whether the social concern of private firms encourage them to behave as R&D leaders. We consider firms participating in a Research Joint Venture, under a private and a mixed duopoly. Private firms care about corporate social responsibility (CSR), and the public firm maximizes social welfare. We find that the social concern of private firms affects differently the incentive to behave as a leader in R&D in the two market structures considered. If the concern about CSR of private firms is low enough, one firm behaves as a leader and the other as a follower under both market structures; there is therefore two equilibria and the result is the same as when private firms are profit maximizers. However, if the concern is not low enough, the results change. In a mixed duopoly, there is only one sequential equilibrium in which the public firm behaves as a leader. In a private duopoly, there is a simultaneous choice of R&D investments as both firms want to be followers. Thus, sufficient concern for society encourages private firms to be followers, although it encourages the public firm to behave as a leader.