We consider managerial delegation with two firms producing goods of different qualities. We show that both firms choose to delegate in equilibrium, but a prisoner dilemma is not inevitable in the case of Cournot competition. Indeed, when the quality asymmetry is sufficiently large, the profits of the high-quality firm are greater than in the case of no delegation.
Colombo, S., Prisoner dilemma in a vertical duopoly with managerial delegation, <<MANAGERIAL AND DECISION ECONOMICS>>, 2022; (43): 1476-1481 [http://hdl.handle.net/10807/209184]
Prisoner dilemma in a vertical duopoly with managerial delegation
Colombo, Stefano
2022
Abstract
We consider managerial delegation with two firms producing goods of different qualities. We show that both firms choose to delegate in equilibrium, but a prisoner dilemma is not inevitable in the case of Cournot competition. Indeed, when the quality asymmetry is sufficiently large, the profits of the high-quality firm are greater than in the case of no delegation.
File in questo prodotto:
Non ci sono file associati a questo prodotto.
I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
