Strategic corporate social responsibility and tariff policies: The timing of commitments and policy implications

Xu, Lili and Lee, Sang-Ho (2021): Strategic corporate social responsibility and tariff policies: The timing of commitments and policy implications.

Abstract

This study considers commitments between tariff policy and corporate social responsibility (CSR) activities, and compares both domestic CSR and foreign CSR. We show that the committed tariff yields lower tariff and higher CSR under domestic CSR, resulting in higher welfare and lower profits, while it might be reversed under foreign CSR if the substitutability is low, which results in lower welfare and profits. Finally, the committed tariff is a desirable equilibrium of an endogenous timing game under domestic CSR, whereas the committed CSR can be under foreign CSR if the substitutability is low.

• Item Type: MPRA Paper
• Language: English
• Keywords: Strategic CSR, trade policy; committed tariff, committed CSR; international duopoly
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency ; Optimal Taxation; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M1 - Business Administration > M14 - Corporate Culture ; Diversity ; Social Responsibility; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O24 - Trade Policy ; Factor Movement Policy ; Foreign Exchange Policy

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