The Economics of Corporate Social Responsibility (CSR)

Abstract:     
This paper provides a general insight into the economic feasibility and desirability of Corporate Social Responsibility (CSR), in order to explain why some firms voluntarily overcomply with social matters. In this paper, the author defines CSR as the activity in which firms make an explicit pair between the sales of private goods and the provision of public good. Furthermore, consumers are divided into two different categories: responsible consumers and non-responsible consumers. The results show that CSR activity could be considered as a firm's strategy to internalize the externality, and thus, it would not be contradicted with profit maximization. Moreover, this could be an alternative way for the provision of public good, especially in the event of government failure on this front.

Accepted Paper Series