Certification of corporate social responsibility activities in oligopolistic markets

Authors


  • We are grateful to three anonymous referees and the co-editor Joanne Roberts for their valuable comments and suggestions that contributed substantially in the improvement of the paper. We would also like to thank Alan Collins, Juan Jose Ganuza, Paolo Garella, and Aleix Calveras, as well as the participants at ASSET 2007 Meetings at Padova, EAERE 2008 at Gothenburg, CRETE 2009 at Tinos, ASSET 2009 Meetings at Istanbul, XXVI Jornadas de Economia Industrial at Madrid, and Centre for Competition and Regulatory Policy 2011 Winter Workshop at Aston Business School for their useful comments and suggestions. Financial support (Project INV-2011-45), while the third author was visiting the Economics Department at Universitat Jaume I, is gratefully acknowledged. Full responsibility for all shortcomings is ours. Email: petrakis@econ.soc.uoc.gr; manasakis@econ.soc.uoc.gr; evangelos.mitrokostas@port.ac.uk

Abstract

Abstract We investigate the impact of alternative certifying institutions on firms’ incentives to engage in costly Corporate Social Responsibility (CSR) activities as well as their relative market and societal implications. We find that the CSR certification standard is the lowest under for-profit private certifiers and the highest under a Non Governmental Organization (NGO), with the standard of a welfare-maximizing public certifier lying in between. Yet, regarding industry output, this ranking is reversed. Certification of CSR activities is welfare enhancing for consumers and firms and should be encouraged. Finally, the market and societal outcomes of CSR certification depend crucially on whether certification takes place before or after firms’ CSR activities.

Abstract

On fait enquête sur l’impact de diverses institutions de certification sur les incitations des entreprises à s’engager dans des activités coûteuses pour assurer la responsabilité sociale ainsi que sur les implications relatives de ces sortes de certification pour le marché et la société. On découvre que le standard de certification est le plus bas pour ceux qui certifient les organisations du secteur privéà but lucratif, et le plus élevé pour ceux qui certifient les organisations non-gouvernementales, et que le standard d’un certificateur public qui viserait à maximiser le bien-être tombe entre les deux. Pour ce qui est de la production industrielle, l’ordre est inversé. La certification des activités de responsabilité sociale améliore le bien-être des consommateurs et des entreprises, et devrait être encouragée. Finalement, les impacts économiques et sociaux de cette certification dépendent de manière cruciale du fait que la certification a eu lieu avant ou après ces activités.

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