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Endogenizing managerial delegation: A new result under Nash bargaining and network effects

Marcella Scrimitore ()

EERI Research Paper Series from Economics and Econometrics Research Institute (EERI), Brussels

Abstract: We reconsider the endogenous choice of delegation to a manager by two down-stream firms in both a Cournot and a Bertrand vertical market with network effects. An upstream monopolist charges a two-part tariff for a crucial input. By applying the Nash solution in a centralized bargaining, we show that hiring a manager is never an equilibrium under Cournot, regardless of network effects, while it can be the equilibrium choice for firms competing à la Bertrand, depending on the interplay between the network externalities and the degree of product substitutability.

Keywords: Nash bargaining; two-part tariff; strategic delegation; network externalities. (search for similar items in EconPapers)
JEL-codes: D43 L14 L21 (search for similar items in EconPapers)
Date: 2019-11-15
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind and nep-ore
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