Managerial delegation in monopoly under network effects

Trishita Bhattacharjee () and Rupayan Pal
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Trishita Bhattacharjee: Indira Gandhi Institute of Development Research

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: This paper examines the possibility of emergence of incentive equilibrium in the case of monopoly, without relying on agency theory based arguments. It shows that, when there is network effect of consumption, it is optimal for a monopolist to offer sales-oriented incentive scheme to her manager. The extent of sales-orientation of the optimal incentive scheme is higher in the case of stronger network effect. It also shows that both the monopolist and consumers are better off under managerial delegation than in case of no delegation, unlike as in the case of usual oligopoly without network effect.

Keywords: Incentive equilibrium; Managerial delegation; Monopoly; Network effects (search for similar items in EconPapers)
JEL-codes: D42 L12 L20 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2013-05
New Economics Papers: this item is included in nep-com, nep-mic, nep-mkt and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ind:igiwpp:2013-009

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