Abstract
In this paper, I established a cross-industry pollution externality design and used the three-stage game analysis framework to discuss the issues linked to firm output, labor union negotiation wages, and the government’s optimal environmental tax. We show that with environmentally oriented corporate social responsibility, the government’s optimal environmental tax rate and firms’ residual pollution abatement level will decrease, which is conducive to environmental protection, and the negotiated wages of all firms will increase. With environmentally oriented corporate social responsibility, the profits and union utility of industry firms will increase, as will the overall consumer surplus and the social welfare level, but there will be no effect on the profit and union utility of firms whose productivity is reduced by pollution.
Highlights
The impacts of industrial policies on environmental quality have always been the focus of attention of the government and the public
We show that with environmentally oriented corporate social responsibility, the government’s optimal environmental tax rate and firms’ residual pollution abatement level will decrease, which is conducive to environmental protection, and the negotiated wages of all firms will increase
With environmentally oriented corporate social responsibility, the profits and union utility of industry firms will increase, as will the overall consumer surplus and the social welfare level, but there will be no effect on the profit and union utility of firms whose productivity is reduced by pollution
Summary
The impacts of industrial policies on environmental quality have always been the focus of attention of the government and the public. According to the definition put forward by the World Business Council for Sustainable Development (WBCSD), “Corporate social responsibility is the continuing commitment by businesses to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families, as well as of the local community and society at large.” In the research on CSR, some papers have assumed that firms care about consumer surplus in society in the setting of corporate social responsibility, such as Elfenbein and McManus (2010), Blanco, Ray-Maquieira, and Lozano (2009), Wang et al (2012), and Chang et al (2014), which is called consumer-oriented CSR Other papers, such as those by Jinji (2013) and Liu et al (2015), have assumed that firms are concerned about the environmental pollution caused by society, which is called environmentally oriented CSR.
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