Decerf, BenoîtBurato, MatteoMatteoBurato2025-05-142025-05-142025-05-142020https://hdl.handle.net/2078.2/21659This project aims at developing a simple model that is able to account for the fact that modern firms choose to invest part of their resources into sustainable actions. With this last term, I refer to a series of initiatives that companies undertake to the advantage of others. Thus, I am concerned with the voluntary generation of positive externalities whose effect has no direct consequence when it comes to helping the firm in being more efficient in its core business (publicly available technology) and at the same time represent an additional cost. Indeed, this choice seems in contradiction with the classical assumption of profit maximization. A key feature of the present analysis, hence, is to allow for the existence of active sustainable effort (i.e. a nonzero allocation of resources to activities that are simply that) in an equilibrium that arise from the firm's solution to a profit maximization problem. The structural framing is done keeping in mind classical micro-economic approaches, integrated by results from stakeholder's theory and corporate social responsibility (CSR) literature. Four major stakeholders will be taken into consideration: consumers, suppliers, employees and shareholders. Each of them is assumed to mediate its relationship with the firm in a market-like structure (output, input, labor and capital respectively), with each of the markets yielding a partial equilibrium that will specify the value of the sustainable actions toward the stakeholder at hand, together with the usual good price and quantity. The fact that consumers, employees and other stakeholders are positively benefited by these actions is explained with the help of results from behavioural and institutionalist economics, with particular attention to the inducement-contribution paradigm. In particular, all the relevant stakeholder are assumed to care for the sustainable actions taken by the firms in their specific favour. Within classes of stakeholders, heterogeneous agents are employed in order to display different sensitivities. This means that different strategies (high sustainable effort vs low extra costs due to sustainability expenses) applied in order to compete for different parts of the stakeholder distributions are in principle all possible. At first each market will be studied in isolation in order to reconstruct the properties of its partial equilibrium. Then, all markets will be investigated jointly in a unique problem where the firm chooses all the quantities at the same time, maximizing profits. The resulting system of first order conditions yields maxima consistent with positive sustainable effort. Furthermore, in order to investigate optimal strategies in a competitive environment, a duopoly case will be taken into consideration with two identical firms modeled according to the results developed with a single firm. Developing best responses, different specialized behaviours emerge: cost efficient strategies and zero sustainable effort alternate premium price strategies with superior sustainable effort. However, resulting Nash equilibria imply symmetric behaviour and positive sustainable effort. Finally, the framework will be put to the test with real data, coming from publicly available information when it comes to quantities and prices, and employing the Golden repository of sustainable initiatives by the Leonardo research centre, part of Imperial College - Imperial Business School, for the sustainable effort data. The results of the simple falsification test employed here points to the consistency of the supposed non-zero effect of sustainable actions.Firm TheoryBehavioural EconomicsSustainabilitytext::thesis::master thesisthesis:27604