BALANCE - Firms’ Social Impact: Balancing Profits and Externalities

This project investigates the social impact of firms by examining how private incentives can be re-aligned with societal priorities. The general approach stems from the observation that, despite the rise of sustainability laws, corporate transition remains largely voluntary and often misaligned with collective welfare. The research shifts the focus from the mere measurement of ESG metrics to the underlying microeconomic mechanisms—such as competitive frictions and information asymmetries—that drive corporate behavior. By building a microfoundation for ESG policy, the project identifies when and how corporate strategies diverge from societal goals. The ultimate objective is to guide the design of regulations that correct these misalignments, moving social impact from an optional strategic choice to a structural component of market equilibrium. Domains of interest include: i) the role of competition in fostering or hindering ethical behavior, ii) the effectiveness of transparency and certification in global value chains, iii) stakeholder coordination mechanisms under information asymmetries, and iv) the long-term consequences of corporate ethics on local economic structures.