Corporate Social Responsibility as a Signaling Device for FDI

摘要: A rise in CSR (corporate social responsibility) has accompanied the nineties FDI (foreign direct investment) to developing countries. may be serving a signaling function when entering firm is of unknown type. Although countries are now competing keenly attract foreign firms, even so excessive tax or excess transfers by firms can still cause Prisoner's Dilemma structure payoffs resulting an inefficient Nash equilibrium. But allows accommodating reveal its type, making cooperation equilibrium outcome. The game differs from standard models since changes payoffs. unique separating exists where only signal. under certain parameter values pooling equilibrium, all signal, becomes possible. number results derived including size expenditure required as fraction profits. An example demonstrates their relevance practical situations.