Financial support from Departamento de Educación, Universidades e Investigación del Gobierno Vasco (IT-223-07) and Ministerio de Ciencia y Tecnología and FEDER (ECO2009-07939) is gratefully acknowledged.
ENDOGENOUS TIMING OF INCENTIVE CONTRACTS IN MIXED MARKETS UNDER BERTRAND COMPETITION*
Article first published online: 14 SEP 2012
© 2012 The Author. The Manchester School © 2012 Blackwell Publishing Ltd and The University of Manchester
The Manchester School
Volume 81, Issue 3, pages 340–355, June 2013
How to Cite
BÁRCENA-RUIZ, J. C. (2013), ENDOGENOUS TIMING OF INCENTIVE CONTRACTS IN MIXED MARKETS UNDER BERTRAND COMPETITION. The Manchester School, 81: 340–355. doi: 10.1111/j.1467-9957.2011.02284.x
Manuscript received 6.10.10; final version received 15.6.11.
- Issue published online: 15 APR 2013
- Article first published online: 14 SEP 2012
In this paper we analyze whether owners of firms prefer to decide on incentive contracts for their managers sequentially or simultaneously under Bertrand competition. It is shown that, in a private duopoly, if one firm is the leader in incentive contracts the other firm prefers to be the follower and thus in equilibrium firms' owners decide incentive contracts sequentially. However, in a mixed duopoly both the private and the public firm want to be the leader in incentive contracts and thus in equilibrium firms make decisions simultaneously.