Strategic Responses Towards Socially Concerned Customers
Pp. 77-87 (11)
Social concerns play an important role in the recent economic literature. We
model customers that obtain an aversion to firms’ profits. We discuss this effect of
customers’ concern on equilibrium outcomes in monopoly and oligopoly markets with
differentiated goods. We find that in monopoly markets and markets with Cournot or
Bertrand competition, customers’ social concern leads to lower equilibrium prices but
has no effect on optimal quantities. When considering out of equilibrium pricing, our
model can account for the preference for fair-trade products.
Bertrand competition, Cournot competition, differentiated goods,
disutility, economic implications, monopoly, non-differentiated goods, social
concern, oligopoly theory, utility.
University of Magdeburg, Faculty of Economics and Management, Universitaetsplatz 2, 39106 Magdeburg, Germany.