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
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)
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind and nep-ore
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Persistent link: https://EconPapers.repec.org/RePEc:eei:rpaper:eeri_rp_2019_15
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