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Endogenously choosing the timing of setting strategic contracts’ levels and content in a managerial mixed duopoly with welfare-based and sales delegation contracts

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  • Yasuhiko Nakamura

    (Nihon University)

Abstract

This paper explores the full observable delay game—which involves the timing of setting one public firm’s and one private firm’s strategic contracts’ levels and content—in a managerial mixed duopoly with a welfare-based delegation à la Nakamura (Int Rev Econ Finance 35:262–277, 2015, J Ind Compet Trade 19:235–261, 2019b, J Ind Compet Trade 19:679–737, 2019c). In this paper, we first show that both the following types of market frameworks can be equilibrium market structures: (1) a market formation in which the manager of the public firm, which has a quantity contract, is the leader and manager of the private firm, which has a price contract and is the follower, and (2) a market configuration in which the manager of the public firm, which has a quantity contract, is the follower, and the private firm, which also has a quantity contract, is the leader. Second, we demonstrate that the form of highest social welfare is achieved under market structure (2). Hence, in such a managerial mixed duopoly, from the perspective of social welfare, it is not as necessary for the relevant authority (including the government) to regulate owners’ free determination of the timing of setting public and private firms’ strategic contracts’ levels and content.

Suggested Citation

  • Yasuhiko Nakamura, 2020. "Endogenously choosing the timing of setting strategic contracts’ levels and content in a managerial mixed duopoly with welfare-based and sales delegation contracts," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(3), pages 363-402, September.
    • Handle: RePEc:spr:inrvec:v:67:y:2020:i:3:d:10.1007_s12232-020-00347-9
    DOI: 10.1007/s12232-020-00347-9
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    References listed on IDEAS

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    More about this item

    Keywords

    Cournot competition; Bertrand competition; Endogenous timing of the levels of strategic contracts; Mixed duopoly; Welfare-based delegation; Sales delegation;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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