Retailing Public Goods: The Economics of Corporate Social Responsibility

This paper explores the feasibility and desirability of Corporate Social Responsibility (CSR). We identify CSR with creation of public goods or curtailment of public bads. Using a model with pro…tmaximizing …rms, the paper shows that there is a direct parallel between CSR and traditional models of private provision of public goods. Indeed, …rms that use CSR will produce public goods at exactly at the same level as predicted by the standard voluntary contribution equilibrium for public goods. We compare CSR with government provision and charitable provision, discussing when CSR by private for-pro…t …rms could have a comparative advantage in dealing with public goods provision. We are grateful to Jim Andreoni, Erlend Berg, Ted Bergstrom, Jordi Blanes, Patrick Francois, Clare Leaver, Rocco Macchiavello, several seminar audiences and especially, an anonymous referee, for helpful feedback. We thank the E.S.R.C. for …nancial support under grant RES-000-23-0717.