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Endogenous Market Structure With Upstream Corporate Social Responsibility

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  • Ryo Masuyama
  • Tomomichi Mizuno

Abstract

Firms in many industries engage in corporate social responsibility (CSR). We consider a vertical market with one upstream firm committed to CSR and two downstream firms providing differentiated goods, and analyze the endogenous market structure (Cournot, Bertrand, or Cournot–Bertrand competition) between the downstream firms. Contrary to conventional wisdom, we show that Bertrand competition emerges in the downstream market when the degree of upstream CSR is high. Under Bertrand competition, consumer surplus is larger, and the upstream firm with CSR prioritizes consumer surplus, which results in a lower input price. Consequently, the downstream firms earn higher profits under Bertrand competition.

Suggested Citation

  • Ryo Masuyama & Tomomichi Mizuno, 2026. "Endogenous Market Structure With Upstream Corporate Social Responsibility," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 47(5), pages 1133-1144, July.
    • Handle: RePEc:wly:mgtdec:v:47:y:2026:i:5:p:1133-1144
    DOI: 10.1002/mde.70092
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