Consumption network externalities, corporate social responsibility, and conflicting interests: Cournot vs. Bertrand competition

Abstract

AbstractIn this paper, we will delineate the nexus of consumption network externalities, corporate social responsibility (CSR), and conflicting interest issues under Cournot and Bertrand competition. We find that a stronger degree of network externalities may bring conflicting interests between firms and the consumers, benefiting firms while hurting consumers. The degree of conflicting interests caused by network externalities is consistent in Cournot and Bertrand competition. Furthermore, when firms do CSR activities, the presence of network externalities may alleviate the conflicting interests caused by CSR activities and bring a “win–win” outcome between firms and consumers in two competition modes.