Divisionalization and Delegation in Oligopoly

Miguel González-Maestre ()

Journal of Economics & Management Strategy, 2000, vol. 9, issue 3, pages 321-338

Abstract: We consider a model where oligopolistic firms create independent divisions or franchises, which subsequently delegate output decisions to managers. We show that the number of firms required to make divisionalization privately profitable is greater in our model than in previous pure divisionalization models. However, in contrast with pure delegation models, we show that the subgame perfect Nash equilibrium approaches perfect competition as divisionalization costs tends to zero, even with a small fixed number of firms. Copyright (c) 2000 Massachusetts Institute of Technology.

Date: 2000
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Working Paper: Divisionalization and Delegation in Oligopoly (1997)
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