Can product differentiation mitigate conflicts of interest between principal stakeholders? A cournot-bertrand comparison
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- handle: 10670/1.tqzzrd
- hal: hal-02929060
- doi: 10.1016/j.econmod.2020.06.016
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info:eu-repo/semantics/altIdentifier/doi/10.1016/j.econmod.2020.06.016
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Stakeholders Corporate governance Product differentiation Wage bargaining Cournot BertrandCiter ce document
Nicolas Le Pape et al., « Can product differentiation mitigate conflicts of interest between principal stakeholders? A cournot-bertrand comparison », HAL-SHS : économie et finance, ID : 10.1016/j.econmod.2020.06.016
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Résumé
This paper aims to investigate the impact of product differentiation on the extent of conflict of interest between principal stakeholders (shareholders, employees, and consumers), which is one of the most important concerns of stakeholder-oriented corporate governance. We consider a differentiated duopoly competing either in price or quantity after the wages of employees are negotiated with a labor union. We find that price competition and quantity competition have drastically different implications on whether product differentiation mitigates stakeholders' conflicts. Specifically, product differentiation can mitigate stakeholders' conflicts when firms compete in price, but not when they compete in quantity. Therefore, the product differentiation effect in mitigating stakeholders' conflicts differs across markets characterized by price competition versus quantity competition.