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Firms' ownership, employees’ altruism, and product market competition

Alessandro De Chiara and Ester Manna

Economic Modelling, 2022, vol. 109, issue C

Abstract: The paper considers profit-maximizing (or private) firms and socially-concerned (or public) firms that compete against each other on both prices and quality. In this setting, we study how product market competition affects firms' decision to hire altruistic or selfish employees. We show that public firms will always hire altruistic employees, whereas private firms will hire selfish employees only if (i) products are sufficiently differentiated and (ii) they compete against public firms. Lastly, we determine which market configuration is associated with the highest quality and the overall customers’ utility. We find that mixed duopoly is more likely to be preferred when product market competition is tougher.

Keywords: Employees' motivation; Firms' ownership; Hiring decision; Nationalization; Privatization; Vertical and horizontal differentiation (search for similar items in EconPapers)
JEL-codes: D03 D21 L13 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.econmod.2022.105774

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