Hiring a manager or not? When asymmetric equilibria arise under outsourcing to a rival
Luciano Fanti and
Marcella Scrimitore ()
Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy
This paper reconsiders the issue of the endogenous choice of delegation in a market in which a vertically integrated producer (VIP) sells an input to a downstream competitor. The choice of whether to hire a manager or not is made at a preplay stage of a game developed by assuming that, within managerial firms, owners provide their managers with incentives affecting both the VIP's decision regarding the input price and retail competition. Our findings rule out that both the symmetric choices of being managerial or entrepreneurial can be implemented in equilibrium when firms compete A la Cournot, which contrasts with previous literature. The paper brings into focus the role of product differentiation in delivering asymmetric equilibria as solutions of the endogenous delegation game.
Keywords: Managerial delegation; duopoly; vertically integrated firm. (search for similar items in EconPapers)
JEL-codes: D43 L13 L21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-mic
Note: ISSN 2039-1854
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pie:dsedps:2017/220
Access Statistics for this paper
More papers in Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy Contact information at EDIRC.
Bibliographic data for series maintained by ().