Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/213550 
Year of Publication: 
2019
Series/Report no.: 
EERI Research Paper Series No. 15/2019
Publisher: 
Economics and Econometrics Research Institute (EERI), Brussels
Abstract: 
We reconsider the endogenous choice of delegation to a manager by two down-stream firms in both a Cournot and a Bertrand vertical market with network effects. An upstream monopolist charges a two-part tariff for a crucial input. By applying the Nash solution in a centralized bargaining, we show that hiring a manager is never an equilibrium under Cournot, regardless of network effects, while it can be the equilibrium choice for firms competing à la Bertrand, depending on the interplay between the network externalities and the degree of product substitutability.
Subjects: 
Nash bargaining
two-part tariff
strategic delegation
network externalities
JEL: 
D43
L14
L21
Document Type: 
Working Paper

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