Abstract
This paper investigates dynamic and strategic (oligopolistic) interactions with respect to their corporate social responsibility (CSR) activities. In order to separate dynamic from strategic effects, the paper proposes a differential game and derives the open loop and Markov perfect Nash equlibria with the cooperative solution as benchmark. The Markov strategies are in stark contrast to the open loop equilibrium that is close to cooperation. This suggests that strategic aspects are indeed crucial. This rat race, once triggered, can explain fast and wide growth of CSR and not necessarily underlying overall efficiency considerations.
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