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Strategic Location and Manager Delegation with Concentrated Consumer Demand

Author

Listed:
  • Stadler Manfred

    (School of Business and Economics, 209188 University of Tübingen , Tübingen, Germany)

  • Unsorg Maximiliane

    (School of Business and Economics, 209188 University of Tübingen , Tübingen, Germany)

Abstract

This paper studies how the separation of ownership and management affects firms’ location decisions in a model of price competition with concentrated consumer demand. Strategic location decisions are made by the owners themselves, whereas operational price decisions are delegated to managers. It is shown that the impact of manager delegation on locations, prices and profits crucially depends on the shape of the demand distribution. When the distribution is “broad-peaked”, delegation leads to more distant locations, higher prices and profits. However, “narrow-peaked” distributions reverse the delegation effect on location and can even lead to lower prices and profits.

Suggested Citation

  • Stadler Manfred & Unsorg Maximiliane, 2025. "Strategic Location and Manager Delegation with Concentrated Consumer Demand," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 245(3), pages 251-267.
    • Handle: RePEc:jns:jbstat:v:245:y:2025:i:3:p:251-267:n:1002
    DOI: 10.1515/jbnst-2023-0061
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    More about this item

    Keywords

    location with demand concentration; separation of ownership and management; manager compensation;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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