 Input Pricing and Market Share Delegation in a Vertically Related Market: Is the Timing Order Relevant?Leonard Wang and Ya-Chin Wang International Journal of the Economics of Business, 2010, vol. 17, issue 2, 207-221 Abstract: This paper adds to the literature on the strategic use of managers' contracts in competition by examining whether market-share delegation, in which managers receive rewards based on a combination of profits and market share, and the order of moves affect input pricing in a vertically related market. It shows that: (i) input pricing is not affected by delegation form and the order of moves between upstream and downstream firms under quantity competition; (ii) downstream firms obtain the same profit as in the simple Nash equilibrium regardless of delegation forms in a delegation-input price-quantity competition game; and (iii) the upstream monopolist will set input price beforehand regardless of the delegation form. Since the outcomes in our model create higher quantity and lower price in a Cournot product market, it lessens the double-marginalization problem in such a vertically separated industry. Keywords: Vertical Externality; Input Pricing; Market-share Delegation; Sales Delegation; Timing Order (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:ijecbs:v:17:y:2010:i:2:p:207-221 Ordering information: This journal article can be ordered from DOI: 10.1080/13571516.2010.483088 Access Statistics for this article International Journal of the Economics of Business is currently edited by Eleanor Morgan More articles in International Journal of the Economics of Business from Taylor & Francis Journals |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.