Cooperation with a multiproduct corporation in a strategic managerial delegation

Garcia, Arturo and Leal, Mariel and Lee, Sang-Ho (2019): Cooperation with a multiproduct corporation in a strategic managerial delegation. Forthcoming in: Managerial and Decision Economics

Abstract

We consider an industry comprised of a multiproduct corporation that adopts CSR as a strategic managerial del egation and examine the profit-incentive to form a cooperative group. We find that competition is an equilibrium for any degree of substitutability and yields the highest CSR, which is increasing in the degree of substitutability. We also show that full cooperation is an equilibrium for lower substitutability but induces no CSR while partial cooperation with one uniplant firm is an equilibrium for higher substitutability but yields lower CSR than that under competition. Therefore, cooperation might reduce strategic CSR activities while competition will encourage higher CSR but yield lower industry profits.

• Item Type: MPRA Paper
• Language: English
• Keywords: corporate social responsibility (CSR); consumer-friendly activities; full cooperation; partial cooperation; multiproduct corporation
• Subjects: L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise; L - Industrial Organization > L4 - Antitrust Issues and Policies > L44 - Antitrust Policy and Public Enterprises, Nonprofit Institutions, and Professional Organizations

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