CSR in an Asymmetric Duopoly with Environmental Externalities
Quaderni - Working Paper DSE N° 959
19 Pages Posted: 3 Sep 2014
Date Written: August 25, 2014
We investigate a linear state dfferential game describing an asymmetric Cournot duopoly with capacity accumulation à la Ramsey and a negative environmental externality (pollution), in which one of the firms has adopted corporate social responsibility (CSR) in its statute, and therefore includes consumer surplus and the environmental effects of production in its objective function. If the market is sufficiently large, the CSR firm sells more, accumulates more capital and earns higher profits than its profit-seeking rival.
Keywords: capital accumulation, asymmetric duopoly, dynamic games
JEL Classification: C73, H23, L13, O31
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