Social Responsibility and Urban Consolidation Centres in Sustainable Freight Transport Markets

Abstract

This paper investigates the impact of Corporate Social Responsibility (CSR) strategies adopted by urban consolidation centres on the competition between logistics service providers. Taking into consideration pollution charges issued by city councils to reduce CO2 emissions in freight distribution, we study a Hotelling-like market setting where logistics providers could voluntarily outsource last mile deliveries to platforms endowed with eco-friendly vehicles. We considered the intensity of the competition, which is captured by switching costs and we theoretically find that in more contestable markets, the interplay between environmental policies and CSR strategies—intended as consumers-oriented pricing schemes—is more likely to enhance the demand by providers for consolidation centres’ deliveries. Conversely, when the competition is weak, i.e., the providers have a relatively strong market power, platforms’ services are less attractive and more relevant CSR pricing strategies are needed to spread out greener freight deliveries and make city logistics environmentally sustainable.