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Capacity Choice in a Mixed Duopoly with Managerial Delegation

Author

Listed:
  • Yoshihiro Tomaru

    (Faculty of Economics, Toyo University)

  • Yasuhiko Nakamura

    (Graduate School of Economics, Waseda University)

  • Masayuki Saito

    (Graduate School of Economics, Waseda University)

Abstract

This paper studies capacity choice in a mixed duopoly with differentiated goods under quantity competition and price competition, taking into account the separation between ownership and management. In this paper, we show that in equilibrium, under quantity competition, both the public firm and the private firm choose over capacity, while under price competition, both choose under capacity. Moreover, in both the competition types, we found that the results do not depend on the degree of product differentiation. Furthermore, under both the competition types, we conduct detailed analysis of each firm`s delegation parameter of managerial contract, and we compare the equilibrium market outcomes obtained in our model with those in the entrepreneurial case, which is considered in several existing literature, and those in the private duopolistic case, which corresponds to the one after privatization of the public firm.

Suggested Citation

  • Yoshihiro Tomaru & Yasuhiko Nakamura & Masayuki Saito, 2009. "Capacity Choice in a Mixed Duopoly with Managerial Delegation," Economics Bulletin, AccessEcon, vol. 29(3), pages 1904-1924.
    • Handle: RePEc:ebl:ecbull:eb-09-00277
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Luciano Fanti & Nicola Meccheri, 2014. "Capacity choice and welfare under alternative unionisation structures," Discussion Papers 2014/176, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    2. Luciano Fanti & Nicola Meccheri, 2017. "Unionization Regimes, Capacity Choice by Firms and Welfare Outcomes," Manchester School, University of Manchester, vol. 85(6), pages 661-681, December.
    3. Nakamura, Yasuhiko, 2014. "Capacity choice in a duopoly with a consumer-friendly firm and an absolute profit-maximizing firm," International Review of Economics & Finance, Elsevier, vol. 34(C), pages 105-117.
    4. Pu-yan Nie, 2014. "Effects of capacity constraints on mixed duopoly," Journal of Economics, Springer, vol. 112(3), pages 283-294, July.

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    More about this item

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise

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