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Ambiguity Between Pirate Incentive And Collective Desirability Within Semi-Delegation Pattern

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  • ZHAO, KAI
  • WU, WANSHU

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.

Suggested Citation

  • Zhao, Kai & Wu, Wanshu, 2015. "Ambiguity Between Pirate Incentive And Collective Desirability Within Semi-Delegation Pattern," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 56(2), pages 259-279, December.
    • Handle: RePEc:hit:hitjec:v:56:y:2015:i:2:p:259-279
    DOI: 10.15057/27598
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    incentive scheme; product differentiation; R&D spillover; semi-delegation;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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