First-mover disadvantages in CSR and when collaboration may overcome them
SeriesResearch Master Defense
LocationTinbergen Institute Amsterdam, room 1.60
Date and time
August 30, 2022
09:00 - 10:00
This thesis examines under what circumstances corporate social responsibility (CSR) is restricted by coordination problems such as a first-mover disadvantage (FMD) and the effects of allowing firms to collaborate in CSR on total CSR and consumer surplus. We consider the connection between CSR and competition policy, placing particular focus on the topic of FMDs, which has been at the forefront of recent policy discussions in this field. We categorize various suggested drivers of FMDs in CSR and formalize three, firm altruism, a common cost, and reputation spillovers, in a model based on Schinkel and Spiegel (2017). In a two-stage game where firms first choose investments in sustainability before choosing output, we find that coordination can result in increased CSR, firm profits, and consumer surplus. However, whether this is the case depends on the relevant FMD driver. In addition, even when sustainability investment is being limited by an FMD, allowing firms to coordinate their sustainability efforts is not always the best or an appropriate solution. In fact, it may exacerbate the problem it was meant to address.