<abstract xmlns="http://www.w3.org/1999/xhtml">

<bold>Background:</bold> Recent scientific research explains corporate social responsibility as an economic activity. This paper interprets social responsibility as a means of power to increase firms’ market share in a duopoly.
<bold>Objectives:</bold> This paper analyses the duopoly model in which firms decide on optimal social investments and production in two phases. The basic research question is how the significance of the conflict affects social investments, market shares, production quantities, profits, and social welfare.
<bold>Methods / Approach:</bold> Conflict technology is described by contest success functions determining market shares. Game theory, optimization, and comparative statics are used in the analysis.
<bold>Results:</bold> The conditions of equilibrium existence and its characteristics are described. Conflict adversely affects the profit of the inefficient firm while it favourably affects social welfare. Conflict’s impact on an efficient firm’s profit depends on the marginal cost difference.
<bold>Conclusions:</bold> If there is no significant cost difference, it is more favourable for firms not to invest in socially responsible activities by agreement, which hurts social welfare. When marginal cost difference is significant, corporate social responsibility increases an efficient firm’s profit, positively impacting social welfare.
</abstract>

Background: Recent scientific research explains corporate social responsibility as an economic activity. This paper interprets social responsibility as a means of power to increase firms’ market share in a duopoly.
Objectives: This paper analyses the duopoly model in which firms decide on optimal social investments and production in two phases. The basic research question is how the significance of the conflict affects social investments, market shares, production quantities, profits, and social welfare.
Methods / Approach: Conflict technology is described by contest success functions determining market shares. Game theory, optimization, and comparative statics are used in the analysis.
Results: The conditions of equilibrium existence and its characteristics are described. Conflict adversely affects the profit of the inefficient firm while it favourably affects social welfare. Conflict’s impact on an efficient firm’s profit depends on the marginal cost difference.
Conclusions: If there is no significant cost difference, it is more favourable for firms not to invest in socially responsible activities by agreement, which hurts social welfare. When marginal cost difference is significant, corporate social responsibility increases an efficient firm’s profit, positively impacting social welfare.

Conflict and Corporate Social Responsibility in Duopoly

Business Systems Research Journal

This work is licensed under the Creative Commons Attribution 4.0 International License.

{"article-title":"Conflict and Corporate Social Responsibility in Duopoly"}

Background: Recent scientific research explains corporate social responsibility as an economic activity. This paper interprets social responsibility as a means...

Conflict and Corporate Social Responsibility in Duopoly

Published Online: Dec 30, 2022

Page range: 36 - 46

Received: Feb 02, 2022

Accepted: Sep 07, 2022

DOI: https://doi.org/10.2478/bsrj-2022-0023

Keywords
conflict, corporate social responsibility, contest success functions, mass effect parameter, game theory

© 2022 Ilko Vrankić, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Conflict and Corporate Social Responsibility in Duopoly

Published Online: Dec 30, 2022

Page range: 36 - 46

Received: Feb 02, 2022

Accepted: Sep 07, 2022

DOI: https://doi.org/10.2478/bsrj-2022-0023

Keywordsconflict, corporate social responsibility, contest success functions, mass effect parameter, game theory

© 2022 Ilko Vrankić, published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
conflict, corporate social responsibility, contest success functions, mass effect parameter, game theory