Strategic Location and Manager Delegation with Concentrated Consumer Demand

Stadler Manfred () and Unsorg Maximiliane
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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

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2025, vol. 245, issue 3, 251-267

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.

Keywords: location with demand concentration; separation of ownership and management; manager compensation (search for similar items in EconPapers)
JEL-codes: G32 L20 L22 M52 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:jns:jbstat:v:245:y:2025:i:3:p:251-267:n:1002

DOI: 10.1515/jbnst-2023-0061

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