Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102656
Authors: 
Vetter, Henrik
Year of Publication: 
2014
Series/Report no.: 
Economics Discussion Papers 2014-38
Abstract: 
The author analyses delegation in homogenous duopoly under the assumption that the firm-managers compete in supply functions. In supply function equilibrium, managers' decisions are strategic complements. This reverses earlier findings in that the author finds that owners give managers incentives to act in an accommodating way. As a result, optimal delegation reduces per-firm output and increases profits to above-Cournot profits. Moreover, in supply function equilibrium the mode of competition is endogenous. This means that the author avoids results that are sensitive with respect to assuming either Cournot or Bertrand competition.
Subjects: 
Delegation
incentives
supply function equilibrium
JEL: 
D22
D43
L22
Creative Commons License: 
http://creativecommons.org/licenses/by/3.0/
Document Type: 
Working Paper

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