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The Economics of Corporate Social Responsibility (CSR): Selling to Someone who Has Personal Valuation

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  • Martin Daniel Siyaranamual

    (Department of Economics, Padjadjaran University)

Abstract

This paper provides general insight on the economic feasibility and desirability of Corporate Social Responsibility (CSR), in order to explain why some firms voluntarily over comply with social matters. In this paper I define CSR as the activity in which firms makes an explicit pair between the sales of private good and the provision of public good. Furthermore, the consumers are divided into two different categories; responsible consumers and non responsible ones. The main result shows that CSR activity could be considered as a firm's strategy to internalize the externality, and thus it would not be contradicted with profit maximization. Moreover, could be an alternative way for the provision of public good, especially in the presence of government failure.

Suggested Citation

  • Martin Daniel Siyaranamual, 2007. "The Economics of Corporate Social Responsibility (CSR): Selling to Someone who Has Personal Valuation," Working Papers in Economics and Development Studies (WoPEDS) 200706, Department of Economics, Padjadjaran University, revised Jun 2007.
  • Handle: RePEc:unp:wpaper:200706
    as

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    File URL: http://ceds.feb.unpad.ac.id/wopeds/200706.pdf
    File Function: First version, 2007
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    References listed on IDEAS

    as
    1. Krueger, Anne O, 1990. "Government Failures in Development," Journal of Economic Perspectives, American Economic Association, vol. 4(3), pages 9-23, Summer.
    2. Gene M. Grossman & Elhanan Helpman, 2005. "A Protectionist Bias in Majoritarian Politics," The Quarterly Journal of Economics, Oxford University Press, vol. 120(4), pages 1239-1282.
    3. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-1458, December.
    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, September.
    5. Stigler, George J, 1982. "The Economists and the Problem of Monopoly," American Economic Review, American Economic Association, vol. 72(2), pages 1-11, May.
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    More about this item

    Keywords

    Corporate social responsibility; public goods;

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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