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Relative Performance Versus Market Share Delegation in a Vertically Related Market

Leonard F. S. Wang

Arthaniti: Journal of Economic Theory and Practice, 2020, vol. 19, issue 1, 16-27

Abstract: Abstract This article, considering relative performance vs. market share delegation in a vertically related market, shows how the order of firms’ move and the type of delegation contract would affect the input-pricing decision of the upstream monopolist and examines which delegation contract is a dominant strategy for downstream firms. The major finding is that having considered input-price commitment and delegation decision together, input price–delegation–quantity competition order coupled with relative performance delegation is the dominant strategy for downstream rivals in a vertically related market. JEL: D21, D43, L13, L21

Keywords: Vertical externality; timing order; market share delegation; relative performance delegation; market competition; differentiated goods (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1177/0976747919834740

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Handle: RePEc:sae:artjou:v:19:y:2020:i:1:p:16-27