Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/236621 
Year of Publication: 
2021
Series/Report no.: 
IAAEU Discussion Paper Series in Economics No. 02/2021
Publisher: 
University of Trier, Institute for Labour Law and Industrial Relations in the European Union (IAAEU), Trier
Abstract: 
We analyze a Cournot duopoly market with differentiated goods and the separation between ownership and control. We consider a delegation game, for which the owner of a firm hires a manager who acts as if the good has a lower degree of substitutability than it really has. This is so either because managers are biased and perceive the good in this way, or because firms design an incentive scheme accordingly, which leads the manager to act in this way. Both firms rely on delegation. We discuss conditions, which lead one firm to increase its profit implying that the usual result of a prisoners' dilemma is avoided.
Subjects: 
Strategic Delegation
Managerial Incentives
Oligopoly
JEL: 
D21
D62
L13
Document Type: 
Working Paper

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