Non-Cooperative Corporate Social Responsibility, Bargaining and Double Marginalization in Bilateral Monopoly

This paper generalizes Gaudin (2016) adding the CSR concerns under a general demand form, and focuses on the double marginalization problem in single-product successive monopolies with one manufacturer and one retailer. We assume that manufacturer or retailer non-cooperatively engages in CSR activities, and bargain over linear input price. We show that the ratio of retail and wholesale pass-through rates depends not only on the demand curvature and its derivative, but also on firm’s CSR weights and relative bargaining power. CSR of retailer or manufacturer in a bilateral monopoly may soften the double marginalization problem when retailer bargains with manufacturer over the linear wholesale price