On the Economics of Corporate Responsibility
This paper seeks to explore the economic mechanisms behind corporate social responsibility (CSR) in a micro-economic model of the firm. The motivation of this study is to shed some light on the potential causes of the observed phenomena of voluntary over-compliance among firms. We consider a few diferent models, both static and dynamic, to investigate how various assumptions about costs and benefits may aspect CSR behavior through a stock of goodwill capital. Our analysis show that in optimum, the profit maximizing firm must balance costs and benefits of CSR. From a cursory look into the CSR literature, we find evidence that some of the hypotheses that can be derived from the models in this paper can be verified empirically.
|Date of creation:||22 Nov 2007|
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- 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.
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Cambridge University Press, number 9780521819473.
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- Eriksson, Clas, 2004. "Can green consumerism replace environmental regulation?--a differentiated-products example," Resource and Energy Economics, Elsevier, vol. 26(3), pages 281-293, September.
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