Optimal Strategies of Product Price, Quality, and Corporate Environmental Responsibility

Wei Peng; Baogui Xin; Yekyung Kwon

doi:10.3390/ijerph16234704

Optimal Strategies of Product Price, Quality, and Corporate Environmental Responsibility

Int J Environ Res Public Health. 2019 Nov 26;16(23):4704. doi: 10.3390/ijerph16234704.

Authors

Wei Peng¹, Baogui Xin¹, Yekyung Kwon²

Affiliations

¹ Nonlinear Science Center, College of Economics and Management, Shandong University of Science and Technology, Qingdao 266590, China.
² Division of Global Business Administration, Dongseo University, Busan 47011, Korea.

Abstract

With the awakening of environmental consciousness, more and more firms desire to go "green" by shifting their focus of corporate social responsibility (CSR) from charitable contributions to environmental actions called corporate environmental responsibility (CER). We develop a monopoly differential game to depict optimal corporate strategies of product price, quality, and CER. Using the Hamilton-Jacobi-Bellman (HJB) equation, we analyze optimal feedback equilibrium strategies for pricing and investing in both quality and CER with/without government subsidies. Numerical simulations show that government subsidy can improve CER and profit.

Keywords: corporate environmental responsibility (CER); corporate social responsibility (CSR); feedback equilibrium; government subsidy; social welfare.

Publication types

Research Support, Non-U.S. Gov't

MeSH terms

Commerce / methods*
Conservation of Natural Resources / methods*
Game Theory
Humans
Industry / organization & administration*
Industry / standards
Quality Control*
Social Responsibility*