Why Firms Should Care for All Consumers

Beschreibung

We compare the strategic potential of Corporate Social Responsibility (CSR) and Customer Orientation (CO) as commitments to larger quantities in Cournot competition, modeled as a multi-stage game. First, in addition to profits, firms can choose to care for the surplus of either all consumers (CSR) or their own customers only (CO). Second, they decide upon the weight of this additional objective. We find that firms prefer to care for all consumers, choosing positive levels of CSR. This result provides an explanation for the recent shift from CO to CSR in both, corporate culture and economic research.

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Lisa Planer-Friedrich

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Corporate Social Responsibility Cournot Duopoly Customer Orientation

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