This paper examines endogenous Corporate Social Responsibility (CSR) in a Cournot duopoly with congestion externalities. Modelling the interaction as a three-stage game (capacities → CSR weight → quantities), we first analyze a unilateral-CSR configuration in which one firm engages in CSR while its rival remains purely profit-maximizing. We show that CSR acts as a strategic differentiation device: even under identical conges- tion conditions, the CSR firm produces more, induces a lower equilibrium price, and earns a higher monetary profit than its conventional rival. The optimal CSR commitment decreases with the firm’s own congestion cost, while its response to the rival’s conges- tion is non-monotonic and governed by an endogenous threshold. Relative to a no-CSR benchmark, unilateral CSR raises total output, consumer surplus, and social surplus for all positive congestion levels, even after accounting explicitly for delay disutility. We then extend the model to bilateral CSR and show that consumer and social surplus increase further, although intensified competition reduces firms’ profits. Finally, when the decision to engage in CSR is itself endogenized, CSR is a strictly dominant adoption strategy for each firm, yielding bilateral CSR as the unique adoption equilibrium.
