publication . Preprint . 2007

On the Economics of Corporate Responsibility

Lundgren, Tommy;
Open Access
  • Published: 22 Nov 2007
This paper seeks to explore the economic mechanisms behind corporate social responsibility (CSR) in a micro-economic model of the firm. The motivation of this study is to shed some light on the potential causes of the observed phenomena of voluntary over-compliance among firms. We consider a few diferent models, both static and dynamic, to investigate how various assumptions about costs and benefits may aspect CSR behavior through a stock of goodwill capital. Our analysis show that in optimum, the profit maximizing firm must balance costs and benefits of CSR. From a cursory look into the CSR literature, we find evidence that some of the hypotheses that can be de...
free text keywords: corporate social responsibility; dynamics; goodwill; uncertainty

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