Strategic corporate social responsibility of high-speed rail in China

Abstract

This paper investigates the strategic corporate social responsibility (CSR) of a high-speed rail (HSR) firm when competing with an airline firm in a differentiated transportation market and the interactions with government environmental policies in the context of a Cournot–Bertrand comparison. We find that a standard CSR chosen by the government is lower under Cournot than that under Bertrand when both the marginal cost of HSR and product substitutability are low enough, while a voluntary CSR chosen by the HSR operator is always higher under Cournot than that under Bertrand. We also find that the voluntary CSR could be higher or lower than the standard CSR, depending on marginal costs, product substitutability, and competition modes. We then show that when the government imposes an environmental tax together with CSR activities, both the strategic CSR and environmental tax are always lower under Cournot than those under Bertrand. Finally, we show that equilibrium traffic volumes, ticket fares, consumer welfare, and social welfare are independent of competition modes with environmental tax.