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Can product differentiation mitigate conflicts of interest between principal stakeholders? A cournot-bertrand comparison

Author

Listed:
  • Nicolas Le Pape

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Yongying Wang

    (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine, ICN Business School)

Abstract

This paper aims to investigate the impact of product differentiation on the extent of conflict of interest between principal stakeholders (shareholders, employees, and consumers), which is one of the most important concerns of stakeholder-oriented corporate governance. We consider a differentiated duopoly competing either in price or quantity after the wages of employees are negotiated with a labor union. We find that price competition and quantity competition have drastically different implications on whether product differentiation mitigates stakeholders' conflicts. Specifically, product differentiation can mitigate stakeholders' conflicts when firms compete in price, but not when they compete in quantity. Therefore, the product differentiation effect in mitigating stakeholders' conflicts differs across markets characterized by price competition versus quantity competition.

Suggested Citation

  • Nicolas Le Pape & Yongying Wang, 2020. "Can product differentiation mitigate conflicts of interest between principal stakeholders? A cournot-bertrand comparison," Post-Print hal-02929060, HAL.
    • Handle: RePEc:hal:journl:hal-02929060
    DOI: 10.1016/j.econmod.2020.06.016
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    Cited by:

    1. Ma, Jie & Wang, Leonard F.S. & Sun, Ji, 2022. "Cross Ownership, Loan Commitment, Managerial Delegation and the “Prisoner’s Dilemma”," MPRA Paper 115237, University Library of Munich, Germany, revised 02 Nov 2022.
    2. Shih-Shen Chen & Po-Sheng Ko & Chien-Shu Tsai & Jen-Yao Lee, 2022. "Managerial Delegation and Conflicting Interest in Unionized Duopoly with Firm Heterogeneity," Mathematics, MDPI, vol. 10(22), pages 1-8, November.
    3. Zhining Zhang & Po‐Sheng Ko & Chu‐Chuan Hsu & Chien‐Shu Tsai, 2024. "Consumption network externalities, corporate social responsibility, and conflicting interests: Cournot vs. Bertrand competition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(4), pages 1894-1900, June.
    4. Di Wu & Ji Sun & Leonard F. S. Wang & Can Yang, 2024. "Cross ownership, union bargaining with managerial delegation, and stakeholders conflicts," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(2), pages 726-733, March.

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    Keywords

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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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