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PRIVATE AND SOCIAL GAINS IN DELEGATION AND SEQUENTIAL GAMES WITH HETEROGENEOUS FIRMS *
Author(s) -
SCRIMITORE MARCELLA
Publication year - 2013
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2012.02297.x
Subject(s) - delegation , oligopoly , profitability index , product differentiation , microeconomics , economics , industrial organization , product market , social welfare , competition (biology) , welfare , market structure , scope (computer science) , product (mathematics) , cournot competition , economies of scope , business , market economy , incentive , finance , management , ecology , programming language , geometry , mathematics , political science , computer science , economies of scale , law , biology
We investigate both quantity and price competition in two differentiated oligopolistic frameworks in which firms are heterogeneous with respect to the ownership structure, i.e. managerial firms compete against entrepreneurial firms, or to the timing decisions, i.e. leaders compete against followers. We show the circumstances under which delegation and sequential strategies, shown to be equivalent under unilateral delegation (Vickers, The Economic Journal , Vol. 95 (1985), pp. 138–147), enable firms to out‐perform their rivals and create scope for welfare gains. The different effects of changes in market structure and the degree of product substitutability on firms' profitability and social welfare are discussed.