Corporate Social Responsibility and Firms' Ability to Collude

We examine a Cournot duopoly with environmental effects, where fi…rms adopt a form of corporate social responsibility (CSR) to de…fine their objective functions. Our analysis focusses on the bearings of CSR on collusion over an infi…nite horizon, sustained by either grim trigger strategies or optimal punishments. Our results suggest that assigning a weight to consumer surplus has a pro-competitive effect under both full and partial collusion. Conversely, the inclusion of environmental externalities in the objective function has an anti-competitive effect under partial collusion, while exerting no effect under full collusion. Under partial collusion, the analysis of the isoquant map of the cartel reveals that complementarity arises between the two weights.