Corporate Provision of Public Goods in a Small Open Economy

16 Pages Posted: 3 Sep 2018

See all articles by John Morgan

John Morgan

University of California, Berkeley - Economic Analysis & Policy Group

Justin Tumlinson

Loughborough University; Ludwig Maximilian University of Munich (LMU)

Date Written: August 24, 2018

Abstract

This short paper extends the analysis of Morgan and Tumlinson (2018) to the setting of a small open economy. We show that in this economy featuring endogenous free entry of firms: (1) Both the number and production of firms is socially optimal. Furthermore production is efficient --- it minimizes average costs. (2) All firms engage in positive CSR: They divert a strictly positive portion of their profits to the public good. (3) When non-entrepreneurs contribute positive amounts to the public good, firm profit diversion exactly coincides with the socially optimal corporate tax.

Keywords: public goods, corporate social responsibility, externalities

JEL Classification: C7, D21, G3, H4, D62

Suggested Citation

Morgan, John and Tumlinson, Justin, Corporate Provision of Public Goods in a Small Open Economy (August 24, 2018). Available at SSRN: https://ssrn.com/abstract=3238476 or http://dx.doi.org/10.2139/ssrn.3238476

John Morgan

University of California, Berkeley - Economic Analysis & Policy Group ( email )

Berkeley, CA 94720
United States
510-642-2669 (Phone)
810-885-5959 (Fax)

HOME PAGE: http://faculty.haas.berkeley.edu/rjmorgan/

Justin Tumlinson (Contact Author)

Loughborough University ( email )

Ashby Road
Nottingham NG1 4BU
Great Britain
+44 (0) 2038051339 (Phone)

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

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