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Strategic delegation of responsibility in competing firms

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Author Info
Bijl, P.W.J. de (Tilburg University, Center for Economic Research)

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Abstract

This paper investigates the strategic impact of organizational design on product market competition. In a duopoly model of horizontal and vertical product differentiation, each firm's manager can impose a product location, or delegate responsibility to select product location to his subordinate. The task of a subordinate is to develop and produce the good. Quality is determined by his effort level, which depends on his private benefits. The managers compete on a product market by selling the goods produced by their subordinates. Conditions for existence of equilibria are derived, and implications for management strategy are discussed

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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 33.

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Date of creation: 1995
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Handle: RePEc:dgr:kubcen:199533

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Web page: http://center.uvt.nl

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Find related papers by JEL classification:
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
L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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  1. Horn, Henrik & Lang, Harald & Lundgren, Stefan, 1994. "Competition, long run contracts and internal inefficiencies in firms," European Economic Review, Elsevier, vol. 38(2), pages 213-233, February. [Downloadable!] (restricted)
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  2. d'Aspremont, C & Gabszewicz, Jean Jaskold & Thisse, J-F, 1979. "On Hotelling's "Stability in Competition"," Econometrica, Econometric Society, vol. 47(5), pages 1145-50, September. [Downloadable!] (restricted)
  3. Fudenberg, Drew & Tirole, Jean, 1984. "The Fat-Cat Effect, the Puppy-Dog Ploy, and the Lean and Hungry Look," American Economic Review, American Economic Association, vol. 74(2), pages 361-66, May. [Downloadable!] (restricted)
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This page was last updated on 2009-12-21.

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