CSR in an Asymmetric Duopoly with Environmental Externality

Abstract

We investigate a linear state differential game describing an asymmetric Cournot duopoly with \ncapacity accumulation a la Ramsey and a negative environmental externality (pollution), in \nwhich one of the firms has adopted corporate social responsibility (CSR) in its statute, and \ntherefore includes consumer surplus and the environmental effects of production in its \nobjective function. If the market is sufficiently large, the CSR firm sells more, accumulates \nmore capital, and earns higher profits than its profit-seeking rival.

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