Endogenous organizational form in a multiproduct mixed duopoly

Kangsik Choi ()
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Kangsik Choi: Pusan National University

The Japanese Economic Review, 2023, vol. 74, issue 2, No 4, 279-299

Abstract: Abstract We analyze the endogenous choice of organizational form between a multidivisional form (i.e., M-form) and unitary form (i.e., U-form) in a multiproduct mixed duopoly. With managerial delegation in public and private firms, we find that if goods are substitutes (complements), choosing the M-form (U-form) for the public and private firms is the dominant strategy in mixed duopoly under Bertrand and Cournot competition. We obtain this result, because the dominant strategy for the private firm shifts from pure multiproduct competition. Moreover, choosing the organizational form under Bertrand (Cournot) competition in equilibrium brings about Pareto efficiency for social welfare (the private firm’s profit and social welfare) regardless of the nature of the goods.

Keywords: Multiproduct; M-form; U-form; Managerial incentives; Mixed duopoly (search for similar items in EconPapers)
JEL-codes: D21 L10 L13 L32 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s42973-021-00089-5

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