This paper sheds light on tourist firms' incentives to engage in corporate social responsibility (CSR) activities in an imperfectly competitive environment. The focus on CSR in the tourism sector has emerged owing to the existence of a critical mass of consumers' willingness to pay a premium for such initiatives. A problem, however, emerges in the production of CSR activities from the supply-side. This is because entrepreneurs exhibit a strong free riding behaviour in their provision. The theoretical results illustrate that the existence of voluntary certification schemes would provide firms with a more efficient framework for undertaking CSR efforts.
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