Munich Personal RePEc Archive

Endogenous timing with a socially responsible firm

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

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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.

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