Abstract
With the awakening of environmental consciousness, more and more firms desire to go “green” by shifting their focus of corporate social responsibility (CSR) from charitable contributions to environmental actions called corporate environmental responsibility (CER). We develop a monopoly differential game to depict optimal corporate strategies of product price, quality, and CER. Using the Hamilton–Jacobi–Bellman (HJB) equation, we analyze optimal feedback equilibrium strategies for pricing and investing in both quality and CER with/without government subsidies. Numerical simulations show that government subsidy can improve CER and profit.
Highlights
As part and parcel of corporate social responsibility (CSR), corporate environmental responsibility (CER) complies with the rise of today’s environmental consciousness in environmental evolutions such as climate change
CER encompasses all the practices put in place by firms to reduce emissions, increase efficiency, and integrate sustainability into their daily operations
Figure shows the impact of price and investment in on value function illustrates that a 1.85% price decrease and a 2.96% investment in CER increase drive a 172.18%
Summary
As part and parcel of corporate social responsibility (CSR), corporate environmental responsibility (CER) complies with the rise of today’s environmental consciousness in environmental evolutions such as climate change. Laudable green CER strategies can improve managerial altruism, consumer loyalty, corporation recommendations, brand sentiment, and cost-cutting efficiency. Suganthi [8] examined a general research framework considering CSR, green practice performance, and employees’ pro-environmental behavior. Have indicated that CSR has a positive effect on corporate profits from different perspectives. We will extend the Nerlove–Arrow model [22] to construct a monopoly differential game model by incorporating the effect of product quality, price, and CER on corporate goodwill to explore optimal corporate strategies.
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