Strategic delegation under price competition and network effects

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89 Citations (Scopus)


Fershtman and Judd (1987) and Sklivas (1987) have shown that strategic delegation under price competition makes firm owners choose incentive contracts that induce managers to be soft in order to reduce competitive intensity. We show in a worked-out example that under sufficiently strong network effects this result is reversed, i.e. the mode of strategic delegation in general depends on more variables apart from whether managers' strategies are complements or substitutes.

Original languageEnglish
Pages (from-to)487-489
Number of pages3
JournalEconomics Letters
Issue number2
Publication statusPublished - 1 Nov 2012


  • Network effects
  • Price competition
  • Strategic delegation


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