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.