TITLE:
Partial Ownership for a Public Firm and Corporate Social Responsibility
AUTHORS:
Lihua Han
KEYWORDS:
Partial Privatization, Corporate Social Responsibility, Mixed Oligopoly
JOURNAL NAME:
Theoretical Economics Letters,
Vol.9 No.7,
September
30,
2019
ABSTRACT: This paper introduces corporate social
responsibility (CSR) into a traditional mixed oligopoly to examine effects of
firms’ CSR activities on privatization of a public firm. Private CSR firms take
both profits and consumer surplus into consideration. It is shown that the
optimal degree of privatization (nationalization) decreases (increases) with an
increase in the percentage of consumer surplus taken into account by the CSR
firms. In other words, the government should hold more shares in the partially
privatized firm when the private firms are CSR rather than pure
profit-maximizing ones. Furthermore, we find that it is socially optimal that the
CSR firms partly (not totally) consider consumers’ benefits.