LAUSR

Abstract Although hospitality researchers have examined the effect of corporate philanthropy on the supply side of the hospitality sector, research on the influences of corporate philanthropy on the hospitality industry remains incomplete. The theoretical innovation of this study fills an important gap by proposing a theoretical model of corporate philanthropy. The model uses game theory to explain the impact of corporate philanthropy on hospitality consumer benefit and to shed light on the effect of corporate philanthropy on the demand side of the hospitality sector. The analysis, based on equilibrium market outcomes, reveals that the impact of corporate philanthropy on hospitality consumer benefit depends on the cost reduction effect and the induced cost of corporate philanthropy. Model solutions offer theoretical support for the hypothesis, popular in the literature, that corporate philanthropy is expected to have a beneficial effect on consumer benefit, and also show that corporate philanthropy may have no impact on hospitality consumer benefit.