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Endogenous Private Leadership under Subsidy Policy on the Social Enterprises

Cho, Sumi and Lee, Sang-Ho (2017): Endogenous Private Leadership under Subsidy Policy on the Social Enterprises.

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Abstract

We investigate a mixed oligopoly model in which private enterprises compete with social enterprises under government subsidy policy, and examine the endogenous choice of private leadership. We show that private leadership is socially desirable, but the numbers of private and social enterprises affect endogenous choices and welfare consequences. We also show that the role of government in choosing the optimal subsidy will be significant when there are more than one private enterprises but its number is smaller than that of the social enterprises.

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