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Is social responsibility for firms competing on quantity evolutionary stable? (English) Zbl 1412.91006

Summary: This paper studies the evolutionary stable strategies and preferences regarding corporate social responsibility of competing firms. Firms randomly compete with each other in pairs. Shareholder-oriented firms have no social responsibility concern, whereas a firm that is concerned with social responsibility is stakeholder-oriented. Each firm first picks one of two production strategies: shareholder-oriented or stakeholder-oriented, and then decides production quantity. We find that socially responsible firms have lower retail prices. The evolutionary stability of a strategy depends on product substitutability and the degree to which firms care about social responsibility. When product substitutability is relatively high, stakeholder-oriented strategy is the evolutionary stable strategy; if product substitutability is lower than a threshold, shareholder-oriented strategy is evolutionary stable; and with moderate product substitutability, both strategies are evolutionary stable.

MSC:

91A22 Evolutionary games
93D20 Asymptotic stability in control theory
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