Premium
Managerial delegation games and corporate social responsibility
Author(s) -
Fanti Luciano,
Buccella Domenico
Publication year - 2019
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.3031
Subject(s) - delegate , delegation , duopoly , subgame perfect equilibrium , microeconomics , cournot competition , corporate social responsibility , business , profit (economics) , nash equilibrium , welfare , economics , public relations , market economy , management , computer science , political science , programming language
In a duopoly in which firms universally engage in corporate social responsibility (CSR) activities, this paper shows that, in contrast to the main tenet of the received managerial delegation literature, if the CSR sensitivity is sufficiently high: (a) when both firms delegate output decisions to managers, at the equilibrium profit (resp. consumer welfare) is higher (resp. lower) than when firms are pure CSR; (b) in a managerial delegation game, asymmetric multiple subgame perfect Nash equilibria emerge in which one firm delegates and the rival does not. These results hold under both the “sales delegation” and “relative profits” manager's bonus schemes.