ABSTRACT
We analyse the cooperative choice of corporate social responsibility when a manufacturer and a retailer in a bilateral monopoly may hold different bargaining powers. We find that an increase in the bargaining power of one of the firms leads to an increase in the degree of social concern of the other firm in the bilateral monopoly and a reduction in its own degree of social concern. It also leads to an increase in the firm´s own profits and a reduction in the other firm’s profits, but it has no effect on the quantity sold, its price, total profits, consumer surplus or social surplus. Just as in the symmetric case, both the manufacturer and the retailer cooperatively choose higher degrees of social concern than under a non-cooperative framework and these choices completely solve the double-marginalization problem.
Acknowledgement
The author thanks an anonymous referee for valuable comments and suggestions.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
4 Other examples include Baron, Berman, and Wu (Citation2016) and Sheu and Gao (Citation2014). See Nagarajan and Sošić (Citation2008) for an early survey of cooperative game theory, including Nash bargaining, to supply chain management.
6 They also examine the cases where i) the retailer (manufacturer) acts as the leader (follower) and ii) firms’ choices are simultaneous. In both cases firms pursue simple profit maximization.
9 The Generalized Nash Bargaining Solution.
10 The second-order condition is also satisfied.
11 The superscript G denotes the GNBS.:
13 For cases in the supply chain management literature see for example p. 117 in Clark and Pereau (Citation2021) and pp. 229–230 in Matsui (Citation2020).
14 It is worth noting the difference in the number of employees of both companies, 5 for Verner Frang and 28,000 for B&Q, (Kogg Citation2003a).
17 Note however that, as Humphrey (Citation1998) points out, B&Q had an extensive environmental policy that went beyond the timber policy examined in this example.
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