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Why firms should care for consumers: Complementary goods

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  • Ohnishi, Kazuhiro

Abstract

Corporate social responsibility (CSR) is a business approach that cares about social and environmental issues, and customer orientation (CO) is a business strategy that centres on the needs and wishes of customers in all decision-making. This paper examines two games of Cournot duopoly where two profit-maximizing firms produce complementary goods. The first game is that both firms consider the surplus of all consumers (CSR) as corporate culture, and the second game is that both firms care only for their own customers (CO). This paper presents the respective optimal levels of CSR and CO. Furthermore, the paper shows that all the profits in these optimal levels are equal.

Suggested Citation

  • Ohnishi, Kazuhiro, 2023. "Why firms should care for consumers: Complementary goods," MPRA Paper 117305, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:117305
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    References listed on IDEAS

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    19. Ohnishi, Kazuhiro, 2022. "Wage-rise contract and mixed Cournot duopoly competition with profit-maximizing and socially concerned firms," MPRA Paper 112536, University Library of Munich, Germany.
    20. Luciano Fanti & Domenico Buccella, 2018. "Profitability of corporate social responsibility in network industries," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 65(3), pages 271-289, September.
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    More about this item

    Keywords

    Complementary goods; Consumer surplus; Cournot model; Customer surplus;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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