Corporate social responsibility focusing on consumer surplus and endogenous competition structure: A case of managerial delegation

Abstract

We suppose that firms care about corporate social responsibility (CSR) and revisit the endogenous choice between price and quantity. We consider that each owner can delegate the decision on market competition to their manager. We express the objective of each firm's owner as the weighted sum of their profit and consumer surplus. We find that the two types of symmetric competitions are observed in equilibrium regardless of the degree of importance of CSR within each firm. In contrast, which of their two competitions is chosen based on the risk domination strikingly depends on the degree of importance of CSR.