A Duopoly Model of Corporate Social Responsibility and Location Choice
Balboni, Alberto; Balboni, Fabio (2009), A Duopoly Model of Corporate Social Responsibility and Location Choice, 58e Congrès de l'AFSE (Association Française de Science Economique), 2009-09, Nanterre, France
TypeCommunication / Conférence
Conference title58e Congrès de l'AFSE (Association Française de Science Economique)
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Abstract (EN)We adopt a framework of vertical differentiation (i.e. differentiation by quality) to study the issue of Corporate Social Responsibility (CSR). We develop a model of duopoly in a two‐country setting, in which firms choose the country of location, the level of CSR and finally compete in the market à la Bertrand. We show that: i) at equilibrium the two firms choose different levels of CSR, i.e. an "ethical" and a "neutral" firm coexist in the market; ii) regardless of its location choice, the “neutral” firm undertakes a level of CSR equal to the minimum international standard; iii) the location choice of both the "ethical" and the "neutral" firm depends on the relative costs of CSR in the two countries; in addition the choice of the “ethical” firm is influenced by the distribution of consumers' tastes for CSR, while the choice of the “neutral” firm is affected by the level of the minimum international standard for CSR.
Subjects / KeywordsCorporate Social Responsibility; Duopoly; Location; Minimum Standards; Vertical Product Differentiation
JELC72 - Noncooperative Games
D43 - Oligopoly and Other Forms of Market Imperfection
L13 - Oligopoly and Other Imperfect Markets
L15 - Information and Product Quality; Standardization and Compatibility
L22 - Firm Organization and Market Structure
M14 - Corporate Culture; Diversity; Social Responsibility
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