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Arturo Garcia, Mariel Leal and Sang-Ho Lee
''Social responsibility in a bilateral monopoly with R&D''
( 2018, Vol. 38 No.3 )
This note examines social responsibility in a linear bilateral monopoly by incorporating a cost-reducing R&D investment and investigates an endogenous timing game. We find that in the presence of R&D, the retailer always adopts social responsibility irrespective of the timing of the game, but the manufacturer adopts only with its leadership in a sequential game where it can take the first-mover advantage. We also show that two sequential choices will be subgame perfect equilibria, but the commitment to the social responsibility by manufacturer is a payoff dominance outcome.
Keywords: social responsibility, R&D investment, fixed-timing game, endogenous-timing game
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
M2 - Business Economics: General
Manuscript Received : Apr 13 2018 Manuscript Accepted : Aug 05 2018

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