Vertical Externality and Strategic Delegation
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.
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
Keywords and Phrases
Delegation; Duopoly; Managerial delegation
International Standard Serial Number (ISSN)
Article - Journal
© 2002 John Wiley & Sons, Ltd., All rights reserved.
01 Apr 2002