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

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

Peng, Wei;Xin, Baogui;Kwon, Yekyung;
International journal of environmental research and public health 2019 Vol. 16
175
peng2019optimalinternational

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.

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