Strategic Delegation in Price Competition

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Strategic Delegation in Price Competition

Güth, Werner; Pull, Kerstin; Stadler, Manfred
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URI: http://nbn-resolving.de/urn:nbn:de:bsz:21-opus-63740
http://hdl.handle.net/10900/47957
Dokumentart: WorkingPaper
Date: 2012
Source: University of Tübingen Working Papers in Economics and Finance ; 43
Language: English
Faculty: 6 Wirtschafts- und Sozialwissenschaftliche Fakultät
Department: Wirtschaftswissenschaften
DDC Classifikation: 330 - Economics
Keywords: Delegation
Other Keywords:
Strategic delegation , Agency theory , Revenue sharing
License: http://tobias-lib.uni-tuebingen.de/doku/lic_ohne_pod.php?la=de http://tobias-lib.uni-tuebingen.de/doku/lic_ohne_pod.php?la=en
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Abstract:

We study price competition in heterogeneous markets where price decisions are delegated to agents. Principals implement a revenue sharing scheme to which agents react by commonly charging a sales price. The results of our model exemplify the importance of both intrafirm- and interfirm interactions of principals and agents in competition. We show that price delegation can increase or decrease the firms’ surplus depending on the heterogeneity of the market and the number of agents employed by the firms.

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