IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v117y2012i2p487-489.html
   My bibliography  Save this article

Strategic delegation under price competition and network effects

Author

Listed:
  • Hoernig, Steffen

Abstract

Fershtman and Judd (1987) and Sklivas (1987) have shown that strategic delegation under price competition makes firm owners choose incentive contracts that induce managers to be soft in order to reduce competitive intensity. We show in a worked-out example that under sufficiently strong network effects this result is reversed, i.e. the mode of strategic delegation in general depends on more variables apart from whether managers’ strategies are complements or substitutes.

Suggested Citation

  • Hoernig, Steffen, 2012. "Strategic delegation under price competition and network effects," Economics Letters, Elsevier, vol. 117(2), pages 487-489.
    • Handle: RePEc:eee:ecolet:v:117:y:2012:i:2:p:487-489
    DOI: 10.1016/j.econlet.2012.06.045
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176512003783
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2012.06.045?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fershtman, Chaim & Judd, Kenneth L, 1987. "Equilibrium Incentives in Oligopoly," American Economic Review, American Economic Association, vol. 77(5), pages 927-940, December.
    2. Steven D. Sklivas, 1987. "The Strategic Choice of Managerial Incentives," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 452-458, Autumn.
    3. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Trishita Bhattacharjee & Rupayan Pal, 2013. "Managerial delegation in monopoly under network effects," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-009, Indira Gandhi Institute of Development Research, Mumbai, India.
    2. Chung-Hui Chou, 2020. "Do Consumers Gain or Lose when Network Externalities Become Stronger?," Economics Bulletin, AccessEcon, vol. 40(3), pages 2193-2200.
    3. Marcella Scrimitore, 2019. "Endogenizing managerial delegation: A new result under Nash bargaining and network effects," EERI Research Paper Series EERI RP 2019/15, Economics and Econometrics Research Institute (EERI), Brussels.
    4. Nakamura, Yasuhiko, 2015. "Endogenous choice of strategic incentives in a mixed duopoly with a new managerial delegation contract for the public firm," International Review of Economics & Finance, Elsevier, vol. 35(C), pages 262-277.
    5. Yasuhiko Nakamura, 2019. "Combining the Endogenous Choice of the Timing of Setting the Levels of Strategic Contracts and Their Contents in a Managerial Mixed Duopoly," Journal of Industry, Competition and Trade, Springer, vol. 19(2), pages 235-261, June.
    6. Yasuhiko Nakamura, 2021. "Price versus quantity in a duopoly with network externalities under active and passive expectations," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 120-133, January.
    7. Bhattacharjee Trishita & Pal Rupayan, 2014. "Network Externalities and Strategic Managerial Delegation in Cournot Duopoly: Is There a Prisoners’ Dilemma?," Review of Network Economics, De Gruyter, vol. 12(4), pages 343-353, January.
    8. Rupayan Pal, 2014. "Managerial delegation in monopoly and social welfare," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(4), pages 403-410, December.
    9. Pal, Rupayan, 2015. "Cournot vs. Bertrand under relative performance delegation: Implications of positive and negative network externalities," Mathematical Social Sciences, Elsevier, vol. 75(C), pages 94-101.
    10. Kangsik Choi & Ki‐Dong Lee, 2022. "Strategic delegation and network externalities under export rivalry market," Manchester School, University of Manchester, vol. 90(1), pages 1-19, January.
    11. Luciano Fanti & Domenico Buccella, 2017. "Manager‐Union Bargaining Agenda Under Monopoly and with Network Effects," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 38(6), pages 717-730, September.
    12. Yasuhiko Nakamura, 2017. "Choosing Price or Quantity? The Role of Delegation and Network Externalities in a Mixed Duopoly," Australian Economic Papers, Wiley Blackwell, vol. 56(2), pages 174-200, June.
    13. Chirco, Alessandra & Scrimitore, Marcella, 2013. "Choosing price or quantity? The role of delegation and network externalities," Economics Letters, Elsevier, vol. 121(3), pages 482-486.
    14. Trishita Bhattacharjee & Rupayan Pal, 2013. "Managerial delegation under network effects," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-003, Indira Gandhi Institute of Development Research, Mumbai, India.
    15. Yasuhiko Nakamura, 2015. "Biased Managers as Strategic Commitment in a Mixed Duopoly with Relative Profit-Maximizers," Journal of Industry, Competition and Trade, Springer, vol. 15(4), pages 323-336, December.
    16. Kangsik Choi & DongJoon Lee, 2022. "Network externalities and endogenous timing in managerial firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1462-1475, July.
    17. Yasuhiko Nakamura, 2018. "Endogenous Market Structures in the Presence of a Socially Responsible Firm," Journal of Industry, Competition and Trade, Springer, vol. 18(3), pages 319-348, September.
    18. Kangsik Choi & DongJoon Lee & Ki‐Dong Lee, 2023. "Biased managers with network externalities," Scottish Journal of Political Economy, Scottish Economic Society, vol. 70(3), pages 201-216, July.
    19. van Witteloostuijn, A. & Boone, C.A.J.J., 1997. "A game theory of organizational ecology : a model of managerial inertia and market selection," Research Memorandum 005, Maastricht University, Netherlands Institute of Business Organization and Strategy Research (NIBOR).
    20. Trishita Bhattacharjee & Rupayan Pal, 2013. "Price vs. Quantity in duopoly with strategic delegation: Role of network externalities," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-010, Indira Gandhi Institute of Development Research, Mumbai, India.

    More about this item

    Keywords

    Strategic delegation; Price competition; Network effects;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:117:y:2012:i:2:p:487-489. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.