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Subsidization Policy on the Social Enterprise for the Underprivileged

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  • Cho, Sumi
  • Lee, Sang-Ho

Abstract

We formulate an oligopoly model in which social enterprise for the underprivileged competes with private enterprises under government subsidization, and examine the market role of private leadership. We show that Stackelberg private leadership is better from the viewpoint of total social welfare, while Cournot followership is better when the social provisions for the underprivileged are emphasized. We also find that both cost inefficiency and the number of private enterprises affect the profitability and welfare consequences. We then investigate the rationing policy on the production of social enterprise and show that output rationing is superior to market share rationing not only for the social concerns of the underprivileged but also for total social welfare, even though it is less attractive than subsidy policy. Finally, we find that there is a strategic over-incentive to pursue social activities under government subsidization.

Suggested Citation

  • Cho, Sumi & Lee, Sang-Ho, 2017. "Subsidization Policy on the Social Enterprise for the Underprivileged," MPRA Paper 84411, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:84411
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    Citations

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    Cited by:

    1. Leal, Mariel & Garcia, Arturo & Lee, Sang-Ho, 2017. "Effects of globalizing a consumer-friendly firm into an asymmetric mixed duopoly," MPRA Paper 83512, University Library of Munich, Germany.
    2. Delbono, Flavio & Lanzi, Diego & Reggiani, Carlo, 2023. "Workers’ firm in mixed duopoly," Economic Modelling, Elsevier, vol. 122(C).
    3. Arturo García & Mariel Leal & Sang-Ho Lee, 2019. "Endogenous Timing with a Socially Responsible Firm," Korean Economic Review, Korean Economic Association, vol. 35, pages 345-370.
    4. Leal, Mariel & Garcia, Arturo & Lee, Sang-Ho, 2018. "The Timing Of Environmental Tax Policy With A Consumer-Friendly Firm," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 59(1), pages 25-43, June.
    5. Cho, Sumi & Lee, Sang-Ho, 2017. "Endogenous Private Leadership under Subsidy Policy on the Social Enterprises," MPRA Paper 83431, University Library of Munich, Germany.
    6. Xu, Lili & Lee, Sang-Ho, 2021. "Strategic Corporate Social Responsibility by a Multinational Firm and International Privatization Policies," MPRA Paper 105651, University Library of Munich, Germany.
    7. Mariel Leal & Arturo García & Sang-Ho Lee, 2021. "Sequencing R&D decisions with a consumer-friendly firm and spillovers," The Japanese Economic Review, Springer, vol. 72(2), pages 243-260, April.
    8. Mariel Leal & Arturo García & Sang-Ho Lee, 2020. "Effects of Integration with a Consumer-Friendly Firm in a Cournot Duopoly," Journal of Industry, Competition and Trade, Springer, vol. 20(3), pages 587-604, September.
    9. Sang‐Ho Lee & Timur K. Muminov, 2021. "R&D Information sharing in a mixed duopoly and incentive subsidy for research joint venture competition," Bulletin of Economic Research, Wiley Blackwell, vol. 73(2), pages 154-170, April.

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    More about this item

    Keywords

    Social Enterprise; Private Enterprise; Private Leadership; Subsidization Policy; Rationing Policy;
    All these keywords.

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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