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LONG‐TERM AND SHORT‐TERM CONTRACT IN A MIXED MARKET *
Author(s) -
NISHIMORI AKIRA,
OGAWA HIKARU
Publication year - 2005
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/j.1467-8454.2005.00265.x
Subject(s) - term (time) , oligopoly , incentive , contract management , business , microeconomics , contract theory , industrial organization , economics , cournot competition , marketing , quantum mechanics , physics
With a two‐period mixed oligopolistic framework, this paper analyses the interaction between the length of incentive contracts and market behaviour. Assuming an environment in which firms choose either a long‐term or short‐term contract, we examine how contracts differ between public and private firms. The results show that the contracts would differ completely among firms; public firm prefers to make a short‐term contract while private firm makes a long‐term contract.