Upstream collusion and corporate social responsibility in downstream competition

As the sustainable economy has become more of a consensus, supply chain members, both manufacturer (e.g., Apple, Huawei, Xiaomi, Nike, and P&G) and retailer (e.g., Uniqlo, Walmart, and Bravo), are concentrated on corporate social responsibility (CSR). The literature in this area has investigated the role of CSR, but the optimal preference for CSR concern of supply chain members is not well understood, especially when manufacturer sells directly by implementing encroachment. This paper studies the optimal preference for CSR concern of supply chain members with considering manufacturer encroachment. We develop the supply chain with a manufacturer (M) and a retailer (R), where the manufacturer sells products via a retail channel which in turn sells them to the final consumers. The manufacturer can also implement encroachment to meet consumers directly. Meanwhile, by considering the manufacturer or retailer may have CSR concern, we explore four scenarios using a game‐theoretic framework. Several interesting findings are as follows. First, for the sake of profits, retailer CSR should be encouraged, which may achieve Pareto improvement under certain conditions. Notably, manufacturer encroachment may narrow the “win–win” situation. While for the sake of environmental protection and consumer well‐being, manufacturer CSR should be encouraged. Second, manufacturer implementing encroachment may not be blind, because it may be worse for itself when retailer has CSR concern. Third, manufacturer CSR may aggravate the cannibalization effect of encroaching, while retailer CSR may relieve it.

Section: Related Literaturementioning

confidence: 99%

Section: Related Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Who will undertake corporate social responsibility in supply chain encroachment? Manufacturer or retailer

Cheng,

Pan,

Gong

2024

“…Gong et al (2022) investigate the CSR allocation problem between supply chain partners. Ying et al (2023) study how downstream CSR influences upstream collusion. Yan et al (2023) compare CSR performances in supplier‐led and manufacturer‐led supply chains.…”

Section: Literature Reviewmentioning

confidence: 99%

Pricing and corporate social responsibility investment strategies for a manufacturer under information asymmetry

2023

We consider a supply chain comprising a dominant manufacturer and a supplier where both firms are socially concerned. The corporate social responsibility (CSR) cost of the supplier is private information. The manufacturer can determine its sales price before the supplier starts production (committed pricing) or postpone its pricing decision until after receiving components from the supplier (noncommitted pricing). Moreover, the manufacturer can determine its CSR investment level before (ex ante CSR investment) or after (ex post CSR investment) the supplier. Four scenarios are investigated to examine the optimal pricing and CSR investment strategies of the manufacturer. We find the following: First, under a noncommitted pricing strategy, the manufacturer always prefers ex post CSR investment. However, the reverse holds under the committed pricing strategy. Second, under the ex post CSR investment strategy, committed pricing benefits the manufacturer for most parameter combinations whereas noncommitted pricing benefits the manufacturer when facing consumers with high CSR awareness and low price awareness. Under the ex ante CSR investment strategy, the manufacturer always prefers committed pricing. Finally, the joint committed pricing with ex ante CSR investment strategy is optimal for the manufacturer.

Settlements in the presence of leniency programs: Costs and benefits

Strathearn,

Chen,

Ross

2023

Over the last few decades, leniency programs have become important components of anti‐cartel policies in many jurisdictions. An extensive literature shows how such programs can destabilize cartels and even discourage their formation in the first place. Much less studied are settlement policies under which reduced fines are offered to settling parties late in the prosecution (when the probability of conviction is high). In particular, there has been little attention paid to the interaction of leniency and settlement policies. This paper examines whether the availability of late‐stage settlements could negatively impact the effectiveness of early‐stage leniency programs. Our main finding is that an appropriately designed settlement program can make collusion more difficult: In equilibrium, the adoption of an optimal settlement program by the Antitrust Authority reduces the occurrence of cartels by decreasing the long‐run gain from collusion. However, an overly generous settlement policy may undermine leniency programs and encourage the formation of more cartels.