What the study found
The study found that firms in a vertically differentiated duopoly can have incentives to adopt environmental corporate social responsibility (ECSR), which means business practices aimed at reducing environmental harm. It also found that both firms can earn higher profits with ECSR than without it.
Why the authors say this matters
The authors conclude that ECSR may be chosen endogenously by both firms, meaning it can emerge from the firms' own strategic choices rather than from outside pressure. They also suggest that cooperative ECSR, where both firms commit together, leads to a higher strategic level than non-cooperative ECSR.
What the researchers tested
The researchers studied strategic incentives to adopt ECSR in a vertically differentiated duopoly, a market with two firms offering different quality levels and facing quality-cost differences. They compared outcomes under non-cooperative ECSR, cooperative ECSR, and no ECSR.
What worked and what didn't
The low-quality firm chooses a higher ECSR level than the high-quality firm when it has a relatively larger quality-cost advantage than the high-quality firm. When the low-quality firm has a relatively smaller quality-cost advantage, it chooses a lower ECSR level than the high-quality firm. Both firms achieve higher profits with ECSR than with no ECSR, and both endogenously choose ECSR regardless of quality-cost differences.
What to keep in mind
The abstract does not describe empirical data, so the findings are presented as a theoretical analysis of a duopoly model. It also does not state any limitations beyond the model setting.
Key points
- The study analyzes ECSR in a vertically differentiated duopoly with quality-cost differences.
- The low-quality firm's ECSR level depends on its quality-cost advantage relative to the high-quality firm.
- Both firms earn higher profits with ECSR than with no ECSR.
- Both firms endogenously choose ECSR regardless of quality-cost differences.
- Cooperative ECSR leads to a higher strategic level than non-cooperative ECSR.
Disclosure
- Research title:
- ECSR raises profits in a vertically differentiated duopoly
- Authors:
- Mingqing Xing, Sang‐Ho Lee
- Institutions:
- Chonnam National University, Weifang University
- Publication date:
- 2026-03-06
- DOI:
- 10.1111/ijet.70017
- OpenAlex record:
- View
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