International Review of Environmental and Resource Economics > Vol 7 > Issue 3–4

The Economics of Corporate Environmental Responsibility

Patricia Crifo, Université de Paris Ouest (Economix), École polytechnique and CIRANO, France, , Bernard Sinclair-Desgagné, HEC Montréal, École polytechnique, CIRANO and CIRPÉE;, Canada and France,
Suggested Citation
Patricia Crifo and Bernard Sinclair-Desgagné (2014), "The Economics of Corporate Environmental Responsibility", International Review of Environmental and Resource Economics: Vol. 7: No. 3–4, pp 279-297.

Publication Date: 18 Dec 2014
© 2014 P. Crifo and B. Sinclair-Desgagné
Environmental Economics,  Industrial Organization,  Public Economics
Corporate environmental responsibilityFirm strategyMarket imperfections


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In this article:
1. Introduction 
2. What is Corporate Environmental Responsibility? 
3. Why do Corporations Engage in CER? 
4. Is CER any Good for Private Firms and Society? 
5. Concluding Remarks 


This paper surveys the economic literature on Corporate Environmental Responsibility (CER). It first defines and illustrates what CER is, and what it is not (namely green washing). It then examines various rationales for firms to implement CER programs: to respond to social pressure, pre-empt regulations, strategically differentiate from competitors, raise entry barriers, retain and motivate employees, lower the cost of capital, promote discipline and good governance, and foster innovation. Whether implementing CER enhances economic welfare is considered next. The paper ends by sketching what appear at this point to be some worthwhile research directions.