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

• Published in: International journal of environmental research and public health Vol. 16; no. 23; p. 4704
• Main Authors: Peng, Wei, Xin, Baogui, Kwon, Yekyung
• Format: Journal Article
• Language: English
• Published: Switzerland MDPI AG 26.11.2019; MDPI
• Subjects: Brand loyalty; Commerce - methods; Conservation of Natural Resources - methods; Consumers; Corporate responsibility; Cost function; Donations; Economic models; Efficiency; Employees; Equilibrium; Equilibrium analysis; Equity financing; Feedback; Game Theory; Government subsidies; Humans; Industry - organization & administration; Industry - standards; Investments; Product quality; Profits; Quality Control; Researchers; Social Responsibility; corporate social responsibility (CSR); social welfare; government subsidy; feedback equilibrium; corporate environmental responsibility (CER)
• ISSN: 1660-4601; 1661-7827; 1660-4601
• DOI: 10.3390/ijerph16234704

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.