The Role of Technology in an Endogenous Timing Game with Corporate Social Responsibility

Abstract This research studies the endogenous choice of simultaneous (Cournot) or sequential (Stackelberg) moves in a quantity-setting duopoly in which firms have social concerns and convex technologies. A parsimonious non-cooperative endogenous timing game (ETG) is developed to determine the sub-game perfect Nash equilibrium (SPNE). The article shows that the market structure strictly depends on the (endogenous) adoption of the available technology. In detail, when costs are convex, the sequential move equilibrium can emerge as the SPNE of the ETG. Results contrast the SPNE emerging in a duopoly – with or without CSR – in which firms produce with constant returns to scale technologies (linear costs), where only simultaneous competition occurs. The article also discusses the welfare outcomes corresponding to the SPNE. The main findings also offer empirical and policy implications. The paper finally considers a mixed duopoly and shows that the results of Amir and De Feo (2014. “Endogenous Timing in a Mixed Duopoly.” International Journal of Game Theory 43: 629–58) – sequential move equilibrium – are confirmed. Still, it pinpoints new results about the private firm’s degree of social concern in determining the market leadership when goods are strategic substitutes .