Can product differentiation mitigate conflicts of interest between principal stakeholders? A cournot-bertrand comparison

Nicolas Le Pape and Yongying Wang ()

Economic Modelling, 2020, vol. 91, issue C, 341-346

Abstract: This paper aims to investigate the impact of product differentiation on the extent of conflict of interest between principal stakeholders (shareholders, employees, and consumers), which is one of the most important concerns of stakeholder-oriented corporate governance. We consider a differentiated duopoly competing either in price or quantity after the wages of employees are negotiated with a labor union. We find that price competition and quantity competition have drastically different implications on whether product differentiation mitigates stakeholders' conflicts. Specifically, product differentiation can mitigate stakeholders' conflicts when firms compete in price, but not when they compete in quantity. Therefore, the product differentiation effect in mitigating stakeholders' conflicts differs across markets characterized by price competition versus quantity competition.

Keywords: Stakeholders; Corporate governance; Product differentiation; Wage bargaining; Cournot; Bertrand (search for similar items in EconPapers)
JEL-codes: D43 J31 L13 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:91:y:2020:i:c:p:341-346

DOI: 10.1016/j.econmod.2020.06.016

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