Managerial Delegation and Conflicting Interest in Unionized Duopoly with Firm Heterogeneity

Abstract

This paper utilized a three-stage dynamic game to analyze the conflicts of interest between stakeholders caused by firm heterogeneity. We show that the higher the degree of heterogeneity, the higher the sales delegation incentive given. The firm’s heterogeneity scale will cause industry profit, union utility, consumer surplus and manager bonus conflicts of interest. Furthermore, the intensity of conflict is lower between the industry and the union than between the industry and consumer and between the industry and manager if the degree of heterogeneity is relatively small.