Strategic delegation and market competitiveness
Caterina Colombo (),
Alessandra Chirco () and
Marcella Scrimitore ()
Economics Bulletin, 2009, vol. 29, issue 3, 1708-1716
Within a strategic delegation model, this paper examines in a quantity setting oligopoly framework the determinants of the degree of strategic delegation - the latter being defined as the extent of the departure from pure profit maximization. The sub-game perfect equilibrium degree of strategic delegation is derived as a function of the two key parameters which determine market competitiveness in a homogeneous product set-up, i.e., the price-elasticity of market demand and the number of firms. With respect to both these parameters we find that their relationship with the degree of delegation is not necessarily monotone. Indeed, for an increase in elasticity or a reduction in market concentration to reduce strategic delegation, these determinants of the Lerner index of monopoly power must satisfy restrictions which guarantee that the initial market environment is sufficiently competitive.
Keywords: Strategic delegation; quantity competition; constant price-elasticity of demand (search for similar items in EconPapers)
JEL-codes: L1 L2 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-09-00007
Access Statistics for this article
More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().