AMBIGUITY BETWEEN PIRATE INCENTIVE AND COLLECTIVE DESIRABILITY WITHIN SEMI-DELEGATION PATTERN

Kai Zhao and Wanshu Wu

Hitotsubashi Journal of Economics, 2015, vol. 56, issue 2, 259-279

Abstract: This paper extends the literature on strategic delegation to a model with a semi-delegation structure. We investigate how the level of spillovers and the degree of product differentiation affect the owner's decision. It is found that owners face a prisoner's dilemma when the spillover is very small or when the products are sufficiently differentiated. Concerning behavior, managers act less aggressively in the pure market, where there are delegated-firms, than in the mixed market, where entrepreneurial and managerial firms co-exist. Furthermore, we highlight the existence of ambiguous areas where delegations make firms profitable, but unable to generate desirable welfare.

Keywords: incentive scheme; product differentiation; R&D spillover; semi-delegation (search for similar items in EconPapers)
JEL-codes: D43 L13 O31 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjec:v:56:y:2015:i:2:p:259-279

DOI: 10.15057/27598

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