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Strategic Environmental Corporate Social Responsibility (ECSR) Certification and Endogenous Market Structure

Authors
  • Sharma, Ajay
  • Rastogi, Siddhartha
Type
Published Article
Journal
The B.E. Journal of Theoretical Economics
Publisher
De Gruyter
Publication Date
Jun 21, 2023
Volume
24
Issue
1
Pages
419–433
Identifiers
DOI: 10.1515/bejte-2022-0139
Source
De Gruyter
Keywords
Disciplines
  • Notes
License
Yellow

Abstract

This paper extends the findings of Liu, Wang, and Lee (2015. “Strategic Environmental Corporate Social Responsibility in a Differentiated Duopoly Market.” Economics Letters 129: 108–11), along two dimensions. First, we consider the case of endogenous market structure a la Singh and Vives (1984. “Price and Quantity Competition in a Differentiated Duopoly.” The RAND Journal of Economics: 546–54). Second, we refine the ECSR certification standards in differentiated duopoly with analysis of both uniform and discriminating standards. We find that NGO certifier will set the ECSR standards below the optimal level. We show that given the ECSR certification standards, there is a possibility of both price and quantity contracts choices by the firms in endogenous market structure. Additionally, we highlight the market structures emerging due to uniform and discriminating ECSR standards.

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