| dc.description.abstract | ECSR (Environment Corporate Social Responsibility) has been a hot issue in recent years. In this article, we will discuss this issue from three different aspects.
First, if the ECSR firm is a monopoly in the industry, facing the pollution tax determined exogenously, the rise of pollution abatement investment cost may increase its profit. If the ECSR firm has great concern about the environment, then larger marginal damage may reduce pollution. If the pollution tax is determined endogenously, the monopolistic ECSR firm with greater concern about the environment will gain higher profit due to a lower pollution tax, but environment quality and social welfare remain unchanged. If the firms in a duopoly market structure face the same situation, the same behavior will worsen social welfare due to higher pollution abatement investment expenditure.
Secondly, if an ECSR firm owns cost-reducing innovation, its licensing behaviors will differ from normal firms. Considering the fixed-fee strategy, the ECSR firm with greater concern about the environment may gain higher profit and is more likely to improve social welfare. Considering the royalty strategy, the ECSR firm may charge a royalty that is smaller than the cost gap. Unlike normal firms, the fixed-fee strategy may be superior to the royalty strategy.
Lastly, under endogenous market structure, more eco-friendly behaviors, like greater concern about the environment or a larger number of ECSR firms, can’t reduce pollution; instead, worsen welfare. If marginal damage becomes larger, the government tends to lower tariff rate to encourage foreign firm to produce more, then may result in better environment quality. | en_US |