When more competition may damage welfare with socially responsible firms

Abstrakt

When more competition may damage welfare with socially responsible firms

Considering a Cournot monopoly/duopoly model with linear/quadratic production costs and Cor­porate Social Responsibility CSR activities, this note shows that, in contrast to the common view, entry may reduce social welfare. Moreover, we remark that the higherthe CSR activities are, the more likely the welfare-damaging entry effect may occur, and thesocial welfare changes following a firm’s entry crucially depend on the degree of convexity of the cost function.