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Organizational Governance, Leadership, and the Influence of Competition

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  • Michael Kopel
  • Clemens Löffler

Abstract

This paper studies the emergence of firm asymmetry as an equilibrium outcome. We consider differentiated Cournot and Bertrand duopolies where firms endogenously select their organizational governance and their timing strategy. For Cournot competition asymmetric and symmetric equilibria may occur. In an asymmetric equilibrium, firms always select different organizational structures. In Bertrand competition, firms always select different timing strategies at the market stage, but may select the same organizational structure. For Bertrand competition we observe that firm profits are nonmonotonic in the intensity of competition, so that firms might be better off if the intensity of competition between firms increases.

Suggested Citation

  • Michael Kopel & Clemens Löffler, 2012. "Organizational Governance, Leadership, and the Influence of Competition," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 168(3), pages 362-392, September.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201209)168:3_362:oglati_2.0.tx_2-r
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    References listed on IDEAS

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    1. AMIR, Rabah & GARCIA, Filomena & KNAUFF, Malgorzata, 2006. "Endogenous heterogeneity in strategic models: symmetry-breaking via strategic substitutes and nonconcavities," CORE Discussion Papers 2006008, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. David Besanko & Ulrich Doraszelski, 2004. "Capacity Dynamics and Endogenous Asymmetries in Firm Size," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 23-49, Spring.
    3. Paul Belleflamme & Cecilia Vergari, 2011. "Incentives To Innovate In Oligopolies," Manchester School, University of Manchester, vol. 79(1), pages 6-28, January.
    4. Basu, Kaushik, 1995. "Stackelberg equilibrium in oligopoly: An explanation based on managerial incentives," Economics Letters, Elsevier, vol. 49(4), pages 459-464, October.
    5. Siegfried K. Berninghaus, 2003. "Now or Later?--Endogenous Timing of Threats," Theory and Decision, Springer, vol. 55(3), pages 235-256, November.
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    Citations

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    Cited by:

    1. Alessandra Chirco & Caterina Colombo & Marcella Scrimitore, 2014. "Organizational Structure and the Choice of Price versus Quantity in a Mixed Duopoly," The Japanese Economic Review, Japanese Economic Association, vol. 65(4), pages 521-542, December.
    2. Michael Kopel & Marco Marini, 2014. "Strategic delegation in consumer cooperatives under mixed oligopoly," Journal of Economics, Springer, vol. 113(3), pages 275-296, November.
    3. Michael Kopel & Marco Marini, 2012. "Optimal Compensation Structure In Consumer Cooperatives Under Mixed Oligopoly," Working Papers 0512, CREI Università degli Studi Roma Tre, revised 2012.
    4. Kopel, Michael & Brand, Björn, 2012. "Socially responsible firms and endogenous choice of strategic incentives," Economic Modelling, Elsevier, vol. 29(3), pages 982-989.

    More about this item

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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