Theoretical Economics Letters

Volume 6, Issue 2 (April 2016)

ISSN Print: 2162-2078   ISSN Online: 2162-2086

Google-based Impact Factor: 1.34  Citations  

Endogenous Choice of Managerial Incentives in a Mixed Duopoly with a Foreign Private Firm

HTML  XML Download Download as PDF (Size: 620KB)  PP. 262-268  
DOI: 10.4236/tel.2016.62029    2,096 Downloads   2,951 Views  Citations

ABSTRACT

This paper studies the endogenous choice of managerial incentives in a mixed duopoly where a public firm competes with a foreign private firm. The foreign firm is partly owned by domestic investors and the firm’s owners have the option to hire a manager. We focus on a new incentive scheme of public firm’s managers that is a linear combination of social welfare and sales revenue. In equilibrium we find that when the weight attached to the foreign firm’s profits in social welfare is high enough, only the public firm hires a manager. This is in contrast with the classical sales delegation contract used in existing literature.

Share and Cite:

Ouattara, K. (2016) Endogenous Choice of Managerial Incentives in a Mixed Duopoly with a Foreign Private Firm. Theoretical Economics Letters, 6, 262-268. doi: 10.4236/tel.2016.62029.

Copyright © 2025 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.