Abstract:
We set out a model of strategic CSR with consumers’ demand for CSR products, where ethical features improve the “quality” of goods through a complementarity between production and CSR provision. Our model builds on the literature based on heterogeneous firms in monopolistic competition with quality product differentiation. By letting the optimal level of ethical standards to be endogenously determined by each profit-maximizing firm, we analyse the link between heterogeneity in productivity and CSR intensity. The analytical results are confirmed by a numerical analysis. We then consider the need for external financing, finding that credit constraints may lead active firms to reduce the optimal CSR level whereas the reputational effect of CSR firms may help in dampening the reduction in firms’ optimal CSR level. Finally, we find that policy interventions may lead to a higher level of the optimal CSR, when addressed to change firms’ incentives and consumers’ ethical awareness.
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Articles in the same Issue
- Research Article
- Voting in Central Banks: Theory versus Stylized Facts
- Delinquency Reinforcement and Balance: Is Exposure to Delinquent Peers Always Risky?
- Can Polluting Firms Favor Regulation?
- Cannabis Control and Crime: Medicinal Use, Depenalization and the War on Drugs
- Coasean Quality of Regulated Goods
- Can Low-Wage Employment Help People Escape from the No-Pay – Low-Income Trap?
- Auctioning Emission Permits with Market Power
- Privatization, Unemployment, and Welfare in the Harris-Todaro Model with a Mixed Duopoly
- Does Eco-labeling of Services Matter? Evidence from Higher Education
- What Do Regulators Value?
- Strategic CSR, Heterogeneous Firms and Credit Constraints
- Regulations to Supplement Weak Environmental Liability
- Intergenerational Educational Persistence among Daughters: Evidence from India
- A Signal of Altruistic Motivation for Foreign Aid
- Has Creative Destruction become more Destructive?
- Is There a Role for Higher Education Institutions in Improving the Quality of First Employment?
- Contribution
- The Effects of School Closure Threats on Student Performance: Evidence from a Natural Experiment
- School Entry, Compulsory Schooling, and Human Capital Accumulation: Evidence from Michigan
- Topics
- Overeducation, Overskilling and Mental Well-being
- Process and Product Innovation and the Role of the Preference Function
- Letter
- Does Evasion Invalidate the Welfare Sufficiency of the ETI?
- How Lobbying Affects Representation: Results for Majority-Elected Politicians
- Consumers’ Misevaluation and Public Promotion
- Meet-the-competition clauses and the strategic disclosure of product quality
- Import Competition and Post-displacement Wages in Korea: Whom You Trade with Matters
Articles in the same Issue
- Research Article
- Voting in Central Banks: Theory versus Stylized Facts
- Delinquency Reinforcement and Balance: Is Exposure to Delinquent Peers Always Risky?
- Can Polluting Firms Favor Regulation?
- Cannabis Control and Crime: Medicinal Use, Depenalization and the War on Drugs
- Coasean Quality of Regulated Goods
- Can Low-Wage Employment Help People Escape from the No-Pay – Low-Income Trap?
- Auctioning Emission Permits with Market Power
- Privatization, Unemployment, and Welfare in the Harris-Todaro Model with a Mixed Duopoly
- Does Eco-labeling of Services Matter? Evidence from Higher Education
- What Do Regulators Value?
- Strategic CSR, Heterogeneous Firms and Credit Constraints
- Regulations to Supplement Weak Environmental Liability
- Intergenerational Educational Persistence among Daughters: Evidence from India
- A Signal of Altruistic Motivation for Foreign Aid
- Has Creative Destruction become more Destructive?
- Is There a Role for Higher Education Institutions in Improving the Quality of First Employment?
- Contribution
- The Effects of School Closure Threats on Student Performance: Evidence from a Natural Experiment
- School Entry, Compulsory Schooling, and Human Capital Accumulation: Evidence from Michigan
- Topics
- Overeducation, Overskilling and Mental Well-being
- Process and Product Innovation and the Role of the Preference Function
- Letter
- Does Evasion Invalidate the Welfare Sufficiency of the ETI?
- How Lobbying Affects Representation: Results for Majority-Elected Politicians
- Consumers’ Misevaluation and Public Promotion
- Meet-the-competition clauses and the strategic disclosure of product quality
- Import Competition and Post-displacement Wages in Korea: Whom You Trade with Matters