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Firms controlled by owners and managerial firms: the "strategic" trade policy game revisited

Luciano Fanti and Domenico Buccella ()

Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy

Abstract: This paper revisits the strategic trade policy issue by considering a bargaining process over managerial contracts and different firms' organizational structures, that is, either family ownership keeping also the firm's control or atomistic shareholders whose board of directors delegate output choice to managers. We show that, in contrast to the traditional results, a plethora of Nash equilibria emerges and the implementation of trade policies in both countries may be efficient (i.e. national social welfares are higher than under free trade) in the presence of a bargaining process in a sales delegation game, depending on the manager's bargaining power as well as the degree of product competition.

Keywords: Export subsidy/tax; Prisoner’s dilemma; Managerial Delegation; Owner-Manager Bargaining; Cournot duopoly. (search for similar items in EconPapers)
JEL-codes: F16 J51 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cse and nep-int
Date: 2017-01-01
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Journal Article: Firms Controlled by Owners and Managerial Firms: The 'Strategic' Trade Policy Game Revisited (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pie:dsedps:2017/215

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