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A MICROECONOMIC MODEL OF CORPORATE SOCIAL RESPONSIBILITY
Author(s) -
Lundgren Tommy
Publication year - 2011
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.2010.04087.x
Subject(s) - goodwill , comparative statics , corporate social responsibility , economics , microeconomics , stock (firearms) , affect (linguistics) , accounting , mechanical engineering , ecology , linguistics , philosophy , engineering , biology
This paper explores the economic mechanisms behind corporate social responsibility (CSR) in a microeconomic model of the firm. The study's motivation is to shed light on the potential causes of the observed phenomena of voluntary over‐compliance among firms. We investigate how assumptions about costs and benefits affect CSR behavior through a stock of goodwill capital. In optimum, the firm must balance marginal costs and benefits of investing in CSR. We characterize the equilibrium and examine comparative statics and dynamics from a parameterized model. Finally, we link some of the model's results to the empirical literature on CSR.