This paper investigates whether an incumbent has an incentive to introduce corporate social responsibility (CSR) activities only as a response to entry by a competitor, i.e., the incumbent would eschew CSR if left uncontested. We assume that the entrant cannot provide CSR at least at the outset for two reasons: (1) it would not be credible due to its lack of recognition and (2) due to high fixed cost to pay e.g., for licensing. More precisely, this paper shows that monopolistic firms can have indeed the incentive to introduce CSR activities only as a response to entry. Therefore, increased competition can turn a firm “green”, providing a “win–win” for business as well as for the environment.
CSR Entry Monopoly
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The authors would like to thank two anonymous referees for their valuable comments.
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