Endogenous choice of environmental corporate social responsibility in a mixed duopoly

Abstract

This paper constructs green managerial delegation contracts in a mixed duopoly wherein either or both public and private firms may adopt environmental corporate social responsibility (ECSR). We demonstrate that the public (private) firm owner positively (negatively) adopts ECSR incentives under Cournot, whereas the incentives are reversed under Bertrand. We also examine an endogenous ECSR choice game and discover that unilateral ECSR adopted by a public firm appears under Cournot, whereas bilateral ECSR where both firms adopt ECSR incentives appears under Bertrand. Our findings show that coordination of competition mode may be harmful to society if both marginal damage and product substitutability are sufficiently high.