Vertical Externality and Strategic Delegation
Abstract
This paper examines the effects of vertical externality generated by the upstream monopoly on the incentives that owners of competing downstream firms give their managers. It is shown that the introduction of the upstream monopoly may have significant effects on the incentive schemes for the downstream firms' managers. In particular, it is shown that in equilibrium, each owner obtains the simple Nash equilibrium outcome regardless of the mode of competition (quantity or price) in the downstream market.
Recommended Citation
Park, E. S. (2002). Vertical Externality and Strategic Delegation. Managerial and Decision Economics, 23(3), pp. 137-141. John Wiley & Sons, Ltd..
The definitive version is available at https://doi.org/10.1002/mde.1051
Department(s)
Economics
Keywords and Phrases
Delegation; Duopoly; Managerial delegation
International Standard Serial Number (ISSN)
0143-6570; 1099-1468
Document Type
Article - Journal
Document Version
Citation
File Type
text
Language(s)
English
Rights
© 2002 John Wiley & Sons, Ltd., All rights reserved.
Publication Date
01 Apr 2002
