Title
A note on strategic delegation: the market share caseA note on strategic delegation: the market share case
Author
Faculty/Department
Faculty of Applied Economics
Research group
Management
Publication type
article
Publication
Amsterdam,
Subject
Economics
Source (journal)
International journal of industrial organization. - Amsterdam
Volume/pages
25(2007):3, p. 531-539
ISSN
0167-7187
ISI
000246231900006
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
Abstract
We consider a two-stage market share delegation game with two competing firms. Each owner delegates the production decision to a manager. Each manager's remuneration is a weighted sum of profits and market share. The market share delegation game results in higher duopoly profits than the sales delegation game. Both output delegation models lead to more aggressive managerial behavior than the standard Cournot case, implying lower profitability and higher social welfare: similar results are obtained for the Bertrand version of the delegation model. Market share delegation is the dominant strategy in a game in which owners can choose not to hire a manager or, if they do so, to pay their manager a bonus based on profits and sales or market share.
E-info
https://repository.uantwerpen.be/docman/iruaauth/d607bc/6f188f99fc4.pdf
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