Convex costs and profitability of corporate social responsibility in network industries

In a duopoly model with linear costs, Fanti and Buccella (2018, International Review of Economics) show that, for sufficiently intense network externalities, the equilibrium in which both firms have social concerns is more profitable than simple profit-seeking. This note shows that, with convex costs, firms competing non-cooperatively on the level of Corporate social responsibility (CSR) may increase or decrease their social engagement depending on the network effect. However, high costs (for instance due to inefficient technologies or strong input suppliers) tend to favour the appearance of the profitability of the CSR choices.