Social responsibility in a bilateral monopoly with R&D

Garcia, Arturo and Leal, Mariel and Lee, Sang-Ho (2018): Social responsibility in a bilateral monopoly with R&D. Published in: Economics Bulletin , Vol. 38, No. 3 (13 April 2018): pp. 1467-1475.

Abstract

This note examines social responsibility in a linear bilateral monopoly by incorporating a cost-reducing R&D investment and investigates an endogenous timing game. We find that in the presence of R&D, the retailer always adopts social responsibility irrespective of the timing of the game, but the manufacturer adopts only with its leadership in a sequential game where it can take the first-mover advantage. We also show that two sequential choices will be subgame perfect equilibria, but the commitment to the social responsibility by manufacturer is a payoff dominance outcome.

• Item Type: MPRA Paper
• Language: English
• Keywords: social responsibility; R&D investment; fixed-timing game; endogenous-timing game
• Subjects: D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M1 - Business Administration > M14 - Corporate Culture ; Diversity ; Social Responsibility

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