Pass‐Through and Tax Incidence in Differentiated Mixed Duopoly With Managerial Delegation

Di Wu and Leonard F. S. Wang

American Journal of Economics and Sociology, 2025, vol. 84, issue 5, 865-876

Abstract: This article explores how managerial delegation affects pass‐through and tax incidence in a mixed Cournot duopoly. It finds that the delegation coefficient of the private firm's manager is positive, while the coefficient of public firm's manager is negative. Sales delegation tends to increase pass‐through rates and amplifies tax incidence. Comparing with the scenarios where a single firm hires a manager, both public and private firms hiring managers will generate the highest pass‐through rates and the incidence of ad valorem tax, while the incidence of specific tax is the lowest.

Date: 2025
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https://doi.org/10.1111/ajes.12639

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