Environmental corporate social responsibility under price competition and the second‐mover advantage: An endogenous timing approach

Abstract

AbstractWe consider an environmental corporate social responsibility (ECSR) under price competition in a product differentiated duopoly and formulate an extensive endogenous timing game where firms choose ECSR and subsequently choose prices. We show that a successive sequential‐move appears in the equilibrium wherein an ECSR leader adopts a lower degree of ECSR and thereupon chooses a price leader. Therefore, the firm with a low degree of ECSR becomes a price leader while the firm with a high degree of ECSR becomes a price follower but earns higher profits, that is, a second‐mover advantage with ECSR‐induced higher costs appears.