Hybrid evolutionary oligopolies and the dynamics of corporate social responsibility

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F61989100%3A27510%2F22%3A10245939" target="_blank" >RIV/61989100:27510/22:10245939 - isvavai.cz</a>

Result on the web

<a href="https://link.springer.com/article/10.1007/s11403-020-00303-4" target="_blank" >https://link.springer.com/article/10.1007/s11403-020-00303-4</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1007/s11403-020-00303-4" target="_blank" >10.1007/s11403-020-00303-4</a>

Result language

angličtina

Original language name

Hybrid evolutionary oligopolies and the dynamics of corporate social responsibility

Original language description

The diffusion of corporate social responsibility is investigated by employing a hybrid evolutionary game where a firm chooses between being either socially responsible, which implies devoting a fraction of its profit to social projects, or non-socially responsible. Consumers prize socially responsible companies by paying a higher reservation price for their products. The hybrid evolutionary framework is characterized by a quantity dynamics that describes the oligopolistic competition given firms&apos; belief about the composition of the industry. At regular intervals of time, this belief is endogenously updated by a retrospective comparison on the profits obtained and on the basis of an evolutionary mechanism. Assuming that firms are Nash players, that is at each instant of time they produce the Nash equilibrium-in-belief quantity, the investigation of the model reveals that an industry homogeneously populated by socially responsible firms is a stable equilibrium when the fraction of profits earmarked for socially responsible activities is sufficiently limited. However, the extra marginal profits of a socially responsible firm are reduced when the number of competitors increases, impeding the diffusion of socially responsible companies. In particular, the trade-off between a higher net margin on sales obtained by socially responsible firms and a lower level of production that reduces the profit gap between a socially responsible firm and the rest of the market shows that an increased size of the industry favors mixed oligopolies. Moreover, imposing the hypothesis of neutrality of CSR activities, the model reveals that being socially responsible is an evolutionarily stable strategy for firms and is convenient for customers. Relaxing the hypothesis of Nash players by introducing boundedly rational firms that decide their level of production according to a partial adjustment toward the best reply, the robustness of these results is confirmed. (C) 2020, The Author(s).

Czech name

—

Czech description

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Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

—

OECD FORD branch

50200 - Economics and Business

Project

<a href="/en/project/GA20-16701S" target="_blank" >GA20-16701S: Hybrid Evolutionary Games and Economic Applications</a><br>

Continuities

P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)

Publication year

2022

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Journal of Economic Interaction and Coordination

ISSN

1860-711X

e-ISSN

1860-7128

Volume of the periodical

17

Issue of the periodical within the volume

1

Country of publishing house

DE - GERMANY

Number of pages

28

Pages from-to

87-114

UT code for WoS article

000578043600001

EID of the result in the Scopus database

2-s2.0-85092484409