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Title Subsidization Policy on the Social Enterprise for the Underprivileged
Author Sumi Cho (Chonnam National University) and Sang-Ho Lee (Chonnam National University)
Volume 33 Number 1
Keywords Social Enterprise, Private Enterprise, Private Leadership, Subsidization Policy, Rationing Policy
Abstract We formulate an oligopoly model in which social enterprise for the underprivileged
competes with private enterprises under government subsidization, and examine the market
role of private leadership. We show that Stackelberg private leadership is better from the
viewpoint of total social welfare, while Cournot followership is better when the social
provisions for the underprivileged are emphasized. We also find that both cost inefficiency
and the number of private enterprises affect the profitability and welfare consequences. We
then investigate the rationing policy on the production of social enterprise and show that
output rationing is superior to market share rationing not only for the social concerns of the
underprivileged but also for total social welfare, even though it is less attractive than subsidy
policy. Finally, we find that there is a strategic over-incentive to pursue social activities
under government subsidization.
File KER-20170630-33-1-06.pdf
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