THE DECISION TO HIRE MANAGERS IN MIXED MARKETS UNDER BERTRAND COMPETITION*

Juan Carlos Bárcena‐ruiz
Authors registered in the RePEc Author Service: Juan Carlos Bárcena-Ruiz

The Japanese Economic Review, 2009, vol. 60, issue 3, 376-388

Abstract: This paper analyses the decisions of firms as to whether or not to hire managers when there is a public firm competing with a private firm in the product market. It is shown that under Bertrand competition with heterogeneous goods both firms hire managers. This is in contrast with the result obtained under Cournot competition, where only the private firm hires a manager. Moreover, welfare is lower if both firms hire managers than if neither firm does. In contrast, under Cournot competition welfare is greater if both firms hire managers.

Date: 2009
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https://doi.org/10.1111/j.1468-5876.2008.00455.x

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