This chapter addresses firms’ strategic decisions on Corporate Social
Responsibility (CSR), focusing on the role of market structure and firm size as drivers of
CSR. Do large firms invest more in CSR? Do firms in more concentrated markets invest
more in CSR? A simple theoretical model with product and CSR competition is
presented. We find that more competition increases CSR investment and that firm size
also positively influences firms’ social responsibility. Size and market concentration thus
contribute in different directions to CSR, which contradicts the usually presumed positive
association between these variables.
Keywords: Corporate social responsibility, Firm size, Market structure.
