Delegation and the Theory of the Firm

Capacity Choice in a Price-Setting Mixed Duopoly with Network Effects

“…Subsequently, from the viewpoints of both a quantitysetting and a price-setting mixed duopoly with differentiated goods, Tomaru et al [23] analyzed the influence of the separation between ownership and management in the fashion ofFershtman and Judd [24], Sklivas [25], and Vickers [26] on the difference between the output levels and capacity levels of both the public firm and the private firm and the changes therein before and after the privatization of the public firm 5 . Most recently, Nakamura and Saito [28] and Nakamura and Saito [29] investigated the capacity choice of a public firm that is a welfaremaximizer and a private firm that is a relative-profitmaximizer in the context of quantity-setting and pricesetting mixed duopolies, respectively; their most important contribution in these two papers is to show that even though the relation between the goods produced by the two firms is restricted to being substitutable, the difference between the output level and capacity level of the private firm can change in accordance with the degree of importance of its relative performance 6 .…”

Capacity Choice in a Price-Setting Mixed Duopoly: The Relative Performance Approach

“…This is why we suppose that social welfare in this paper is equal to the sum of consumer surplus and producer surplus. 7 As indicated in Matsumura and Matsushima [20] and Nakamura and Saito [19], if we adopt the sales delegation approach as in Fershtman and Judd [11], Sklivas [12], and Vickers [13] and replace each firm's sales with the (negative) profit of the opponent firm in their model, the firms would use a positive value of β. Moreover, see the works of Kockesen et al [21] and Joe [22] for detailed discussions on arguments and empirical results presenting views supporting both positive and negative values of β.…”

“…Subsequently, Tomaru et al [10] introduced the separation between ownership and management in the fashion of Fershtman and Judd [11], Sklivas [12], and Vickers [13] into in the models of Ogawa [6] and Bárcena-Ruiz and Garzón [7]. Most recently, Lu and Poddar [14] and Bárcena-Ruiz and Garzón [15] investigated each firm's endogenous timing games on capacity choices in a quantity-setting mixed duopoly and a price-setting mixed duopoly with differentiated goods, respectively.…”

Capacity Choice in a Quantity-Setting Mixed Duopoly with Network Effects

“…As explained in Hoernig [9], the above demand system can be derived from the following quasi-linear concave utility function of a representative consumer: 4 In another strand of research on the capacity choice problems of public and private firms in a mixed duopoly, Tomaru et al [10] analyzed the influence of the separation between ownership and management in the fashion of Fershtman and Judd [11], Sklivas [12], and Vickers [13] on the difference between the output and capacity levels of both the public and the private firms and the changes therein before and after privatization of the public firm. Furthermore, more recently, Nakamura and Saito [14] and Nakamura and Saito [15] investigated the capacity choice of a public firm that is a social welfare-maximizer and a private firm that is a relative profit-maximizer in the context of quantity-setting and price-setting mixed duopolies, respectively; their most important contribution in these two papers is to show that even though the relation between the goods produced by the two firms is restricted to being substitutable, the difference between the output and capacity levels of the private firm can change in accordance with the degree of importance of its relative performance.…”