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When Necessity Becomes a Virtue: The Effect of Product Market Competition on CSR



    (Instituto de Empresa)



    (Instituto de Empresa)

We report evidence that Product Market Competition is positively associated to widely-used Corporate Social Responsibility ratings. In particular we show that different market concentration measures are negatively associated to social impact ratings. We also provide evidence that changes in import penetration rates instrumented by import tariffs are positively associated to these social ratings. Finally we report that firm pollution levels are negatively associated to market concentration measures. Our results suggest that -all else constant- doubling competition in the marketplace would increase CSR ratings of an average company between 184% and 800%.

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Paper provided by Instituto de Empresa, Area of Economic Environment in its series Working Papers Economia with number wp08-27.

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Length: 32 pages
Date of creation: Jul 2008
Date of revision:
Handle: RePEc:emp:wpaper:wp08-27
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  1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, June.
  2. Graff Zivin Joshua & Small Arthur, 2005. "A Modigliani-Miller Theory of Altruistic Corporate Social Responsibility," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-21, May.
  3. Abagail McWilliams & Donald S. Siegel & Patrick M. Wright, 2006. "Corporate Social Responsibility: Strategic Implications," Journal of Management Studies, Wiley Blackwell, vol. 43(1), pages 1-18, 01.
  4. Mark Bagnoli & Susan G. Watts, 2003. "Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(3), pages 419-445, 09.
  5. Maria Guadalupe, 2007. "Product Market Competition, Returns to Skill, and Wage Inequality," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 439-474.
  6. Stephen Nickell, 1993. "Competition and Corporate Performance," CEP Discussion Papers dp0182, Centre for Economic Performance, LSE.
  7. David P. Baron, 2001. "Private Politics, Corporate Social Responsibility, and Integrated Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 7-45, 03.
  8. Donald S. Siegel & Donald F. Vitaliano, 2006. "An Empirical Analysis of the Strategic Use of Corporate Social Responsibility," Rensselaer Working Papers in Economics 0602, Rensselaer Polytechnic Institute, Department of Economics.
  9. Hansen, Lars Gårn, 1997. "Environmental Regulation through Voluntary Agreements," MPRA Paper 47537, University Library of Munich, Germany, revised 1999.
  10. William Robert Nelson, 2001. "Incorporating Fairness into Game Theory and Economics: Comment," American Economic Review, American Economic Association, vol. 91(4), pages 1180-1183, September.
  11. Timothy J. Feddersen & Thomas W. Gilligan, 2001. "Saints and Markets: Activists and the Supply of Credence Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 149-171, 03.
  12. Catherine J. Morrison-Paul & Donald S. Siegel, 2006. "Corporate Social Responsibility and Economic Performance," Rensselaer Working Papers in Economics 0605, Rensselaer Polytechnic Institute, Department of Economics.
  13. Segerson, Kathleen & Miceli, Thomas J., 1998. "Voluntary Environmental Agreements: Good or Bad News for Environmental Protection?," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 109-130, September.
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