Optimal Strategies of Product Price, Quality, and Corporate Environmental Responsibility
With the awakening of environmental consciousness, more and more firms desire to go &ldquo ; green&rdquo ; 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&ndash ; Jacobi&ndash ; 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.