Cross-ownership and green managerial delegation contracts in a mixed oligopoly

Mingqing Xing and Sang-Ho Lee ()

Journal of Environmental Economics and Management, 2024, vol. 126, issue C

Abstract: This study examines strategic interactions between cross-ownership and managerial delegation contracts with environmental corporate social responsibility (ECSR) incentives in a mixed oligopoly. We find that private firms always utilize ECSR incentives in competing prices under cross-ownership, whereas public managers do so only when there is severe environmental damage. We also demonstrate that the ECSR incentives for welfare-weighted public managers are always lower than for their profit-weighted counterparts when they employ ECSR incentives, which leads to lower environmental damage and greater social welfare. Finally, we show that welfare-weighted public delegation increases the private firm's ECSR compared to no public delegation, which is reversed in the profit-weighted variant. Our findings suggest that the government should design an environmental incentive scheme to their public managers that can also induce private managers to behave more aggressively in abatement activities as the degree of cross-ownership increases.

Keywords: Cross ownership; Environmental corporate social responsibility; Green managerial delegation contracts; Profit-weighted delegation; Welfare-weighted delegation (search for similar items in EconPapers)
JEL-codes: H23 L13 M14 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:126:y:2024:i:c:s0095069624000676

DOI: 10.1016/j.jeem.2024.102993

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