Endogenous Choice of Strategic Variables in an Asymmetric Duopoly with Respect to the Demand Functions that Firms Face

Yasuhiko Nakamura

Manchester School, 2015, vol. 83, issue 5, 546-567

Abstract: type="main">

This paper examines endogenous choice of firm's strategic variables—i.e. price or quantity contract—in a duopoly in which the demand functions that they face are asymmetric in managerial delegation case with separation between ownership and management. We show that when the degree of asymmetry between the demand functions that the two firms face is low, price and quantity competitions are observed in the equilibrium, whereas when the degree of such asymmetry is high, the two types of market structures in which the strategic variables selected by the two owners are different from each other are observed in the equilibrium.

Date: 2015
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