This paper investigates how socially responsible behaviour influences firms' profits and social welfare when production entails an environmental externality. We study a Cournot oligopoly with pollution, with one CSR operating in the market. A CSR firm takes into account not only its profits but also internalises its own share of pollution and is sensitive to consumer surplus. With a large enough market, the CSR firm obtains higher profits than its profit-seeking competitors, and induces a higher level of social welfare. The results are confirmed when a socially optimal tax on pollution is adopted. Indeed, even if the environmental concern restrains the production of a CSR firm, the social concern expands it. The second effect more than offsets the first one in a large market, making the CSR production strategy be more aggressive compared to its competitors.

Incentives, performance and desirability of socially responsible firms in a Cournot oligopoly / Lambertini, Luca; Tampieri, Alessandro. - In: ECONOMIC MODELLING. - ISSN 0264-9993. - STAMPA. - 50:(2015), pp. 40-48. [10.1016/j.econmod.2015.05.016]

Incentives, performance and desirability of socially responsible firms in a Cournot oligopoly

TAMPIERI, ALESSANDRO
2015

Abstract

This paper investigates how socially responsible behaviour influences firms' profits and social welfare when production entails an environmental externality. We study a Cournot oligopoly with pollution, with one CSR operating in the market. A CSR firm takes into account not only its profits but also internalises its own share of pollution and is sensitive to consumer surplus. With a large enough market, the CSR firm obtains higher profits than its profit-seeking competitors, and induces a higher level of social welfare. The results are confirmed when a socially optimal tax on pollution is adopted. Indeed, even if the environmental concern restrains the production of a CSR firm, the social concern expands it. The second effect more than offsets the first one in a large market, making the CSR production strategy be more aggressive compared to its competitors.
2015
50
40
48
Lambertini, Luca; Tampieri, Alessandro
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Utilizza questo identificatore per citare o creare un link a questa risorsa: https://hdl.handle.net/2158/1097846
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