Delegation in a mixed oligopoly:the case of multiple private firms

Heywood, John and Ye, Guangliang (2009) Delegation in a mixed oligopoly:the case of multiple private firms. Managerial and Decision Economics, 30 (2). pp. 71-82. ISSN 0143-6570

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Previous research examining mixed duopolies shows that the use of an optimal incentive contract for the public firm increases welfare and that privatization reduces welfare. We demonstrate that these results do not generalize to a mixed oligopoly with multiple private firms. We derive the optimal incentive contract for a public firm that weighs both profit and welfare and show that its use may either increase or decrease welfare depending on the number of private firms and the exact nature of costs. We also identify the conditions that determine whether or not privatizing the public firm facing an optimal incentive contract reduces welfare.

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Journal Article
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Managerial and Decision Economics
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10 Jun 2013 18:59
Last Modified:
20 Sep 2023 00:31