Managerial incentives and social efficiency of entry

Arijit Mukherjee and Yingyi Tsai

Discussion Papers from University of Nottingham, School of Economics

Abstract: This paper studies the role of separation of ownership and management in determining the welfare implications of entry in oligopolistic markets. We show, in the presence of managerial incentive schemes with cost asymmetry, that entry is socially insufficient unless scale economies are very large. The policy implications emerging from the present analysis suggests that entry should be encouraged under cost asymmetry and not large scale economies.

Keywords: Cost asymmetry; Incentive delegation; Insufficient entry; Excessive entry (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:not:notecp:10/14

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