Strategic Delegation under Cost Asymmetry

Flavio Delbono, Luca Lambertini () and Luigi Marattin

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We revisit the two-stage duopoly game with strategic delegation and asymmetric technologies of Sen and Stamatopoulos (2015). We show that their conclusions are misled by the restrictive assumption that the extent of delegation to managers is restricted to a binary set. Allowing for a continuous set of delegation incentives, we prove that the delegation stage is a prisoners' dilemma, the unique subgame perfect equilibrium entailing both fi?rms hiring managers. At equilibrium, the more efficient ?firm makes higher profi?ts.

JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-mic
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:wp1016

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