G-COE GLOPE II Working Paper Series Subsidization in Mixed Oligopoly with Managerial Delegation: Price Competition
نویسندگان
چکیده
This paper studies optimal production subsidy in a mixed duopoly with separation between ownership and management. Although many existing literature shows that the first best production allocation is achieved under several economic environments (so-called irrelevance result), we find that this result holds in the following two cases. (1) The owners simultaneously/sequentially decide their sales weight in the managerial delegation contracts. (2) The managers simultaneously/sequentially choose their quantity levels. Therefore, the irrelevance result is robust against the introduction of sales delegation with separation between ownership and management, even if the firms simultaneously/sequentially determine their sales delegation weights or quantity levels. JEL Classification: D21, L13, L33
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