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Optimal zoning of managerial duopoly

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  • Hang Cao
  • Leonard F. S. Wang

Abstract

This paper investigates optimal zoning of two managerial firms in an unconstrained linear city. Comparing with the case in which firms are not managerial type, the strategic delegation increases the incentives of one firm to locate farther from the rival. Then, a welfare function is introduced to highlight zoning regulation as an influential competition policy tool. Depending on the regulator's objective function and the timing of location choice, we provide a new mechanism that allows the regulator to attain the optimal locations of managerial firms and can lead to strong or weak competition.

Suggested Citation

  • Hang Cao & Leonard F. S. Wang, 2023. "Optimal zoning of managerial duopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 58-67, January.
    • Handle: RePEc:wly:mgtdec:v:44:y:2023:i:1:p:58-67
    DOI: 10.1002/mde.3666
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