Firms’ strategic delegation with heterogeneous consumers
Cong Pan (),
DongJoon Lee () and
Kangsik Choi ()
Additional contact information
Cong Pan: Kyoto Sangyo University
DongJoon Lee: Osaka Sangyo University
Kangsik Choi: Pusan National University
Journal of Economics, 2020, vol. 131, issue 3, No 1, 199-221
Abstract We revisit firms’ strategic delegation in a Cournot game. We consider a market comprising two consumer groups, with either a high or low willingness to pay. In this market, we first consider firms’ identical marginal costs and show that either/both firms’ owners may strategically abandon the delegation option to avoid price collapse. We find three types of delegation decisions with either/both/no firm delegating in equilibrium. We further consider firms’ asymmetric marginal costs and show that the asymmetric equilibrium wherein only the less efficient firm delegates will exist in a wider parameter range, compared to that wherein only the more efficient firm delegates. Moreover, delegation may enable the less efficient firm to achieve a higher profit than her rival.
Keywords: Strategic delegation; Consumer heterogeneity; Market segmentation; Cournot competition (search for similar items in EconPapers)
JEL-codes: L11 L13 L21 M21 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s00712-020-00707-7 Abstract (text/html)
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:kap:jeczfn:v:131:y:2020:i:3:d:10.1007_s00712-020-00707-7
Access Statistics for this article
Journal of Economics is currently edited by Giacomo Corneo
More articles in Journal of Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().