When more competition may damage welfare with socially responsible firms

  1. Luciano Fanti
  2. Domenico Buccella

Abstract

When more competition may damage welfare with socially responsible firms


Considering a Cournot monopoly/duopoly model with linear/quadratic production costs and Cor­porate Social Responsibility (CSR) activities, this note shows that, in contrast to the common view, entry may reduce social welfare. Moreover, we remark that the higherthe CSR activities are, the more likely the welfare-damaging entry effect may occur, and thesocial welfare changes following a firm’s entry crucially depend on the degree of convexity of the cost function.

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Ekonomia

23/3, 2017

Strony od 123 do 134

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