A Note on Endogenous Timing with Strategic Delegation: Unilateral Externality Case
AbstractWe investigated the endogenous choice of roles by managerial firms in the presence of unilateral externality. The choice over timing can be taken either by managers or by owners. It is shown that (i) the choice of the timing by managers entails the same profit that owners would have achieved by specifying the timing in the delegation contract; and (ii) firms move simultaneously if the degree of unilateral externality is small, while sequentially if the degree of unilateral externality is large, with the firm generating unilateral externality as a follower; the owner of the follower firm delegates to restrict output, while his/her counterpart does not delegate it.
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Bibliographic InfoPaper provided by China Economics and Management Academy, Central University of Finance and Economics in its series CEMA Working Papers with number 390.
Length: 16 pages
Date of creation: Mar 2010
Date of revision:
Managerial Delegation; Externality; Stackelberg; Endogenous Timing;
Other versions of this item:
- Kangsik Choi & Yuanzhu Lu, 2012. "A Note On Endogenous Timing With Strategic Delegation: Unilateral Externality Case," Bulletin of Economic Research, Wiley Blackwell, vol. 64(2), pages 253-264, 04.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
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