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What Corporate Social Responsibility Motivations are better for The Environment?

Villena, Mauricio (2019): What Corporate Social Responsibility Motivations are better for The Environment?

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Abstract

Is it always the case that an environmental friendly CSR firm will be preferred to a consumer caring CSR-firm in terms of the environmental damage generated in the market?. Will always an environmental friendly CSR firm be preferred to a firm which concerns only with profit maximization?. We explore these questions by analizyng a duopoly market setting in which a CSR firm interacts with a profit maximizing firm. Unlike previous literature, we consider different motivations for the CSR firm: (i) the CSR firm acts as a consumer-friendly firm, cares for not only its profits but also consumer surplus, as a proxy of its concern for its "stakeholders" or consumers; (ii) the CSR firm main objective is a combination of its own profit and the environment, caring for the environmental damage produced by the market in which it interacts; and (iii) the CSR firm is both consumer and environmental friendly. As benchmark we also consider the case in which both firms in the duopoly only concern about material profits, evaluating for all cases the environmental damage generated in their market interaction.

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