Non-cooperative corporate social responsibility, bargaining, and double marginalization in bilateral monopoly

Abstract

ABSTRACT This study incorporates CSR concerns in a general demand model focusing on the double marginalization problem in single-product successive monopolies. It assumes that the manufacturer or retailer non-cooperatively engages in CSR activities and bargains over the linear input price. The findings demonstrate that the ratio of retail and wholesale pass-through depends not only on the demand curvature and its derivative but also on the firm’s CSR weights and relative bargaining power. In a bilateral monopoly, including CSR considerations by either the manufacturer or the retailer may alleviate the double marginalization problem when bargaining over the linear wholesale price.