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Strategic Delegation in a Multiproduct Mixed Industry

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  • Shirley J. Ho
  • Hao‐Chang Sung

Abstract

We examine strategic delegation in a multiproduct mixed duopoly with nonprofit organization (NPO) and for‐profit organization (FPO). We will demonstrate that the nonprofitable mission service can reduce both the interest conflicts between the NPO and FPO owners and those between the NPO owner and self‐benefited manager. The profit orientation in the compensation schemes will vary with different relative costs. Although the NPO owner may have a different objective from the FPO owner, they all end up having their managers raise their prices and reducing competition in the profitable market. Moreover, as the regulated price of mission service increases, both firms will charge more for their profitable services, but the owner of NPO could still overcompensate her or his manager, when the indirect impact on increasing the conflict of interest is higher than the direct impact on price. Copyright © 2013 John Wiley & Sons, Ltd.

Suggested Citation

  • Shirley J. Ho & Hao‐Chang Sung, 2014. "Strategic Delegation in a Multiproduct Mixed Industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 35(4), pages 278-287, June.
    • Handle: RePEc:wly:mgtdec:v:35:y:2014:i:4:p:278-287
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    Cited by:

    1. Kangsik Choi, 2023. "Endogenous organizational form in a multiproduct mixed duopoly," The Japanese Economic Review, Springer, vol. 74(2), pages 279-299, April.
    2. Gerritsen, Dirk F., 2015. "Security analysts’ target prices and takeover premiums," Finance Research Letters, Elsevier, vol. 13(C), pages 205-213.
    3. Barteková, Eva & Kemp, René, 2016. "National strategies for securing a stable supply of rare earths in different world regions," Resources Policy, Elsevier, vol. 49(C), pages 153-164.
    4. Horio, Masayuki & Shigeto, Sawako & Ii, Ryota & Shimatani, Yukihiro & Hidaka, Masato, 2015. "Potential of the ‘Renewable Energy Exodus’ (a mass rural remigration) for massive GHG reduction in Japan," Applied Energy, Elsevier, vol. 160(C), pages 623-632.

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