Unilateral decisions to hire managers in a mixed duopoly with a foreign labour-managed competitor

Numerous studies examine the strategic decisions regarding managerial incentive contracts within private oligopoly markets. Several studies also delve into managerial incentives within mixed oligopoly markets, where state-owned public firms with economic welfare objectives compete against capitalist private firms focused on profit objectives. Additionally, several recent studies consider international mixed oligopoly markets with foreign capitalist firms. For example, one study examines the decisions of firms to hire managers when a state-owned public firm competes with a foreign capitalist firm, indicating that in equilibrium, both firms hire managers, leading to higher domestic economic welfare compared to a scenario where neither firm hires a manager. However, these studies typically focus on mixed oligopoly markets where state-owned firms compete with capitalist firms and do not consider the presence of labour-managed firms. In this paper, we investigate the firms’ decisions to hire managers when a state-owned firm competes with a foreign labour-managed firm. We reveal that our equilibrium outcomes coincide with the equilibrium where neither firm hires a manager.