Delegation and Limited Liability in a Modern Capitalistic Economy
We examine an effect of limited liability on strategic delegation in a Cournot duopoly with demand uncertainty. We establish that owners of each firm always delegate their tasks, decisions, and responsibility to a manager under limited liability, while they do not always do so under unlimited liability. This result is consistent with the fact that separation of ownership and management as well as limited liability prevail in many modern large companies.
|Date of creation:||Apr 2012|
|Date of revision:||Apr 2012|
|Contact details of provider:|| Postal: 1-155 Uegahara Ichiban-cho, Nishinomiya, Hyogo 662-8501|
Web page: http://www-econ.kwansei.ac.jp/~econ/index_e.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Povel, Paul & Raith, Michael, 2004. "Financial constraints and product market competition: ex ante vs. ex post incentives," International Journal of Industrial Organization, Elsevier, vol. 22(7), pages 917-949, September.
- Vickers, John, 1985. "Delegation and the Theory of the Firm," Economic Journal, Royal Economic Society, vol. 95(380a), pages 138-147, Supplemen.
- Federico Etro, 2010. "Endogenous market structures and the optimal financial structure," Canadian Journal of Economics, Canadian Economics Association, vol. 43(4), pages 1333-1352, November.
- Franck, Bernard & Le Pape, Nicolas, 2008.
"The commitment value of the debt: A reappraisal,"
International Journal of Industrial Organization,
Elsevier, vol. 26(2), pages 607-615, March.
- Bernard Franck & Nicolas Le Pape, 2008. "'The Commitment Value of the Debt : a Reappraissal'," Post-Print halshs-00277605, HAL.
When requesting a correction, please mention this item's handle: RePEc:kgu:wpaper:87. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Toshihiro Okada)
If references are entirely missing, you can add them using this form.