Strategic Delegation and the Shape of Market Competition

Luca Lambertini ()

Scottish Journal of Political Economy, 2000, vol. 47, issue 5, 550-570

Abstract: What shape can we expect market competition to exhibit? This question is addressed in the present paper. Firms are allowed to choose whether to act as quantity or price setters, whether to move early or delay as long as possible at the market stage, and whether to be entrepreneurial or managerial. Moreover, firms can endogenously determine the sequence of such decisions. It is shown that in correspondence of the (unique) subgame perfect equilibrium of the game, all firms first decide to delay, then to act as Cournot competitors, and finally stockholders decide to delegate control to managers. Hence, sequential play between either managerial or entrepreneurial firms, as well as simultaneous play between entrepreneurial firms, are ruled out.

Date: 2000
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https://doi.org/10.1111/1467-9485.00178

Related works:
Working Paper: Strategic Delegation and the Shape of Market Competition (1997)
Working Paper: Strategic Delegation and the Shape of Market Competition (1996)
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