Corporate social responsibility, vertical product differentiation and international competition

摘要

Would a foreign firm's consumer-oriented corporate social responsibility (CSR) activities be rewarded by an importing country's voluntary tariff reduction? The current paper addresses this question in an import-competing duopoly model with vertical product differentiation. It is shown that the tariff will decrease if the foreign firm switches from a purely profit-driven firm to a CSR firm. A consumer-oriented CSR strategy will always hurt the domestic firm's profit, whereas the relationship between the foreign firm's profit and CSR sensitivity (the degree to which a firm cares about consumer welfare) is invertedly U-shaped. When firms' decisions to switch to CSR are endogeneized, only the foreign firm will become a CSR firm.