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Managerial incentives and social efficiency of entry

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  • Arijit Mukherjee
  • Yingyi Tsai

Abstract

This paper studies the role of separation of ownership and management in determining the welfare implications of entry in oligopolistic markets. We show, in the presence of managerial incentive schemes with cost asymmetry, that entry is socially insufficient unless scale economies are very large. The policy implications emerging from the present analysis suggests that entry should be encouraged under cost asymmetry and not large scale economies.

Suggested Citation

  • Arijit Mukherjee & Yingyi Tsai, 2010. "Managerial incentives and social efficiency of entry," Discussion Papers 10/14, University of Nottingham, School of Economics.
    • Handle: RePEc:not:notecp:10/14
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    References listed on IDEAS

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    1. Okuno-Fujiwara, Masahiro & Suzumura, Kotaro, 1993. "Symmetric Cournot Oligopoly and Economic Welfare: A Synthesis," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(1), pages 43-59, January.
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