Strategic delegation under price competition and network effects

Steffen Hoernig

Economics Letters, 2012, vol. 117, issue 2, 487-489

Abstract: Fershtman and Judd (1987) and Sklivas (1987) have shown that strategic delegation under price competition makes firm owners choose incentive contracts that induce managers to be soft in order to reduce competitive intensity. We show in a worked-out example that under sufficiently strong network effects this result is reversed, i.e. the mode of strategic delegation in general depends on more variables apart from whether managers’ strategies are complements or substitutes.

Keywords: Strategic delegation; Price competition; Network effects (search for similar items in EconPapers)
JEL-codes: D43 L20 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (85)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:117:y:2012:i:2:p:487-489

DOI: 10.1016/j.econlet.2012.06.045

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