R＆D Decision and Optimal Quantity Incentive in Production on Manager

This paper, by introducing the principal-agent relations between a firm owner and its manager into AJ model, discusses the impact of the quantity incentive in production of the firm owner set on R＆D decision and the equilibriums of R＆D input and quantity output of duopoly enterprises in the reality of the departure of ownership and firm controlling capacity. With the help of the tradeoff between the firm owner＇s profit and the manager＇s revenue, the owner of the firm can thereby selects an optimal incentive on manager to optimize its profit. And finally the paper also demonstrates the improved P＆D performance and the output equilibriums in Cournot game.