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Clemens Buchen, Sven A. Hartmann and Alberto Palermo
''Our product is unique: A note on a delegation game with differentiated products''
( 2021, Vol. 41 No.3 )
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.
Keywords: Strategic Delegation, Managerial Incentives, Oligopoly
JEL: D2 - Production and Organizations: General
L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : Dec 18 2020 Manuscript Accepted : Sep 17 2021

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