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Social responsibility in a bilateral monopoly with R&D

Author

Listed:
  • Garcia, Arturo
  • Leal, Mariel
  • Lee, Sang-Ho

Abstract

This note examines social responsibility in a linear bilateral monopoly by incorporating a cost-reducing R&D investment and investigates an endogenous timing game. We find that in the presence of R&D, the retailer always adopts social responsibility irrespective of the timing of the game, but the manufacturer adopts only with its leadership in a sequential game where it can take the first-mover advantage. We also show that two sequential choices will be subgame perfect equilibria, but the commitment to the social responsibility by manufacturer is a payoff dominance outcome.

Suggested Citation

  • Garcia, Arturo & Leal, Mariel & Lee, Sang-Ho, 2018. "Social responsibility in a bilateral monopoly with R&D," MPRA Paper 87200, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:87200
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    File URL: https://mpra.ub.uni-muenchen.de/87200/1/MPRA_paper_87200.pdf
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    References listed on IDEAS

    as
    1. Hamilton, Jonathan H. & Slutsky, Steven M., 1990. "Endogenous timing in duopoly games: Stackelberg or cournot equilibria," Games and Economic Behavior, Elsevier, vol. 2(1), pages 29-46, March.
    2. Lambertini, Luca & Tampieri, Alessandro, 2015. "Incentives, performance and desirability of socially responsible firms in a Cournot oligopoly," Economic Modelling, Elsevier, vol. 50(C), pages 40-48.
    3. Liu, Chih-Chen & Wang, Leonard F.S. & Lee, Sang-Ho, 2015. "Strategic environmental corporate social responsibility in a differentiated duopoly market," Economics Letters, Elsevier, vol. 129(C), pages 108-111.
    4. Toshihiro Matsumura & Akira Ogawa, 2014. "Corporate Social Responsibility or Payoff Asymmetry? A Study of an Endogenous Timing Game," Southern Economic Journal, Southern Economic Association, vol. 81(2), pages 457-473, October.
    5. Björn Brand & Michael Grothe, 2015. "Social responsibility in a bilateral monopoly," Journal of Economics, Springer, vol. 115(3), pages 275-289, July.
    6. Brand, Björn & Grothe, Michael, 2013. "A note on ‘Corporate Social Responsibility and Marketing Channel Coordination’," Research in Economics, Elsevier, vol. 67(4), pages 324-327.
    7. Toshihiro Matsumura & Noriaki Matsushima, 2015. "Should Firms Employ Personalized Pricing?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(4), pages 887-903, October.
    8. Chen, Charlie L. & Liu, Qian & Li, Jie & Wang, Leonard F.S., 2016. "Corporate social responsibility and downstream price competition with retailer's effort," International Review of Economics & Finance, Elsevier, vol. 46(C), pages 36-54.
    9. Kopel, Michael & Brand, Björn, 2012. "Socially responsible firms and endogenous choice of strategic incentives," Economic Modelling, Elsevier, vol. 29(3), pages 982-989.
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    11. Gregory E. Goering, 2014. "The Profit‐Maximizing Case for Corporate Social Responsibility in a Bilateral Monopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 35(7), pages 493-499, October.
    12. Patricia Crifo & Vanina D. Forget, 2015. "The Economics Of Corporate Social Responsibility: A Firm-Level Perspective Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(1), pages 112-130, February.
    13. repec:kap:jeczfn:v:124:y:2018:i:2:d:10.1007_s00712-017-0565-1 is not listed on IDEAS
    14. Toshihiro Matsumura & Akira Ogawa, 2009. "Payoff dominance and risk dominance in the observable delay game: a note," Journal of Economics, Springer, vol. 97(3), pages 265-272, July.
    15. Kosuke Hirose & Sang-ho Lee & Toshihiro Matsumura, 2017. "Environmental corporate social responsibility : A note on the first-mover advantage under price competition," Economics Bulletin, AccessEcon, vol. 37(1), pages 214-221.
    16. Markus Kitzmueller & Jay Shimshack, 2012. "Economic Perspectives on Corporate Social Responsibility," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 51-84, March.
    17. Sang-Ho Lee & Lili Xu, 2018. "Endogenous timing in private and mixed duopolies with emission taxes," Journal of Economics, Springer, vol. 124(2), pages 175-201, June.
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    20. Leal, Mariel & Garcia, Arturo & Lee, Sang-Ho, 2018. "The Timing Of Environmental Tax Policy With A Consumer-Friendly Firm," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 59(1), pages 25-43, June.
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    More about this item

    Keywords

    social responsibility; R&D investment; fixed-timing game; endogenous-timing game;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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