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In this paper we study the conditions under which socially responsible firms can develop a first-mover advantage. We consider a price-setting duopoly market with vertically and horizontally differentiated products, where firms can engage in socially responsible activities and thereby increase the willingness to pay of consumers of their products. It is shown that a CSR leader, i.e. a firm which commits to a level of socially responsible activities prior to its competitor, achieves higherdoi:10.2139/ssrn.1408632 fatcat:puqhjxs2hfbfnkxb4mki6ystvm