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Strategic Delegation In A Stackelberg Game With Multiple Stages

Author

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  • PARASKEVAS V. LEKEAS

    (Department of Applied Mathematics, University of Crete, Heraklion, Crete 71409, Greece)

  • GIORGOS STAMATOPOULOS

    (Department of Economics, University of Crete, 74100 Rethymno, Crete, Greece)

Abstract

We analyze strategic delegation in a Stackelberg model with an arbitrary number,n, of firms. We show thatn-1firms delegate their production decisions and only one firm (the one whose manager is the first mover) does not. The later a manager commits to a quantity, the higher his incentive rate. Letting$u_i^*$denote the equilibrium payoff of the firm whose manager commits in theith stage, we show that$u_n^*>u_{n-1}^*>\cdots>u_2^*>u_1^*$. We also compare the delegation outcome of our game with that of a corresponding Cournot oligopoly and show that managers who commit late (early) are given higher (lower) incentive rates than managers in the Cournot market.

Suggested Citation

  • Paraskevas V. Lekeas & Giorgos Stamatopoulos, 2011. "Strategic Delegation In A Stackelberg Game With Multiple Stages," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 13(03), pages 341-352.
    • Handle: RePEc:wsi:igtrxx:v:13:y:2011:i:03:n:s0219198911003039
    DOI: 10.1142/S0219198911003039
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    Cited by:

    1. John S. Heywood & Zheng Wang, 2020. "Delivered pricing and endogenous delegation of contract type," Australian Economic Papers, Wiley Blackwell, vol. 59(3), pages 232-249, September.

    More about this item

    Keywords

    Sequential competition; late-movers' advantage; delegation; D43; L13; L21;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • C0 - Mathematical and Quantitative Methods - - General
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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