Corporate social responsibility and strategic relationships |
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Authors: | Yoshifumi Hino Yusuke Zennyo |
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Institution: | 1.Graduate School of Business Administration,Kobe University,Kobe,Japan;2.Faculty of Economics,Osaka University of Economics,Osaka,Japan |
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Abstract: | We analyze a delegation game relevant to the conduct of corporate social responsibility (CSR) in which the firm’s owner offers the manager a contract consisting of firm profit and social welfare. We derive three results that distinctly differ from existing findings. First, CSR decisions are strategic complements for firms. Second, with simultaneous CSR decisions, the equilibrium price is equal to marginal cost, despite the fact that firms compete in a Cournot duopoly. Finally, with sequential CSR decisions, unlike the follower firm, the leader firm never exhibits CSR. However, the follower firm can enjoy a profit equal to that derived by the leader in a Cournot–Stackelberg game. |
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