Abstract
In this paper, I study the conditions under which a CSR leader, that is a firm which commits to invest in socially responsible activities prior to its competitor, can develop a first-mover advantage. A price-setting duopoly market with horizontally differentiated products is considered, where firms can increase the willingness to pay of the consumers of their products by investing in socially responsible activities. It is shown that if the investment in CSR is perfectly specific to the CSR leader and does not spill over to the CSR follower, the CSR leader achieves higher profits. Hence, a first-mover advantage arises. If however, CSR investment spills over to and hence benefits also the CSR follower by increasing the follower sales, then a second-mover advantage might arise for the follower. A characterization is provided for the influence of the intensity of competition and the level of spillovers on the relative and absolute level of CSR activities and the firms’ incentives to engage in CSR.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
