Abstract
This chapter investigates a mixed duopoly market in which a state-owned public firm competes on price against a foreign private firm. Each firm decides whether or not to hire a manager. The chapter demonstrates that there is a subgame perfect Nash equilibrium in which only the foreign private firm hires a manager. This is in contrast with the case in which the state-owned firm competes against a domestic private firm, where both firms hire managers.
Keywords: Backward induction, Domestic consumer surplus, Domestic economic welfare, Foreign private firm, International mixed duopoly, Managerial delegation, Price competition, State-owned public firm, Subgame perfection.
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