Social awareness and duopoly competition

BELHADJ nada (ISG, University of Tunis), Jean J. GABSZEWICZ (Universite catholique de Louvain) and Ornella TAROLA (DISSE, University of Rome “La Sapienza”) address Social awareness and duopoly competition.

ABSTRACT: Human actions are often guided both by individual rationality and by social norms. In this paper we explore how duopoly market competition values the variants of a product, when these variants embody at different levels the requirements derived from some social norm. In a model where preferences of consumers depend partially on the levels of compliance of the variants with the social norm, we characterize the equilibrium path along which firms choose sequentially their level of compliance and their price.