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Endogenous organizational form in a multiproduct mixed duopoly

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  • Kangsik Choi

    (Pusan National University)

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.

Suggested Citation

  • Kangsik Choi, 2023. "Endogenous organizational form in a multiproduct mixed duopoly," The Japanese Economic Review, Springer, vol. 74(2), pages 279-299, April.
    • Handle: RePEc:spr:jecrev:v:74:y:2023:i:2:d:10.1007_s42973-021-00089-5
    DOI: 10.1007/s42973-021-00089-5
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    More about this item

    Keywords

    Multiproduct; M-form; U-form; Managerial incentives; Mixed duopoly;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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