Abstract
In the context of asymmetry of information between firms' owners and their managers, we investigate the use of incentive contracts as strategic variables in a duopoly with a public and a private firm. By giving the public manager an incentive scheme based on a linear combination of profit and sales revenue, we show that welfare can be improved. Furthermore, we show that the government should not privatize the public company.
Original language | English |
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Pages (from-to) | 373-386 |
Number of pages | 14 |
Journal | International Journal of Industrial Organization |
Volume | 13 |
Issue number | 3 |
DOIs | |
Publication status | Published - Sept 1995 |
Keywords
- Asymmetric information
- Mixed oligopoly
- Strategic contracts