Endogenous timing with a socially responsible firm

Garcia, Arturo and Leal, Mariel and Lee, Sang-Ho (2018): Endogenous timing with a socially responsible firm.

Abstract

This study considers a mixed duopoly in which a socially responsible firm competes with a private firm by incorporating environmental externality and clean technology. We analyze the endogenous market structure in which both firms strategically decides quantities sequentially or simultaneously, which also affects abatement activities. We show that depending on the relative concerns on environment and consumers surplus, the socially responsible firm can be less or more aggressive in the production and abatement. Thus, not only the signifiicance of externality but also the instrumental conflict of social concerns are crucial factors in determining the equilibrium of endogenous timing game, in which the socially responsible firm might earn higher profits.

• Item Type: MPRA Paper
• Language: English
• Keywords: endogenous timing; socially responsible firm; mixed duopoly; clean technology; environmental externality
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L31 - Nonprofit Institutions ; NGOs ; Social Entrepreneurship; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics

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