Abstract
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 language | English |
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Pages (from-to) | 487-489 |
Number of pages | 3 |
Journal | Economics Letters |
Volume | 117 |
Issue number | 2 |
DOIs | |
Publication status | Published - 1 Nov 2012 |
Keywords
- Network effects
- Price competition
- Strategic delegation