The Distributive Role of Managerial Incentives in a Mixed Duopoly

We study a mixed oligopoly where a partially public firm competes with a private firm. When the private firm offers managerial incentives, there is a redistribution of profit and output from the private to the public firm, but the aggregate output and social welfare may remain unchanged. When the private firm is foreign owned, the extent of privatization is less while managerial incentives are milder.