We revisit the two-stage duopoly game with strategic delegation and asymmetric technologies of Sen and Stamatopoulos (2015). We show that their conclusions are driven by the restrictive assumption that the extent of delegation to managers is confined to a binary set. Allowing for a continuous set of delegation incentives, we prove that the delegation stage is a prisoners’ dilemma, the unique subgame perfect equilibrium entailing both firms hiring managers. At equilibrium, the more efficient firm makes higher profits.

Flavio Delbono, Luca Lambertini, Luigi Marattin (2016). Strategic delegation under cost asymmetry. OPERATIONS RESEARCH LETTERS, 44(3), 443-445 [10.1016/j.orl.2016.04.006].

Strategic delegation under cost asymmetry

DELBONO, FLAVIO;LAMBERTINI, LUCA;MARATTIN, LUIGI
2016

Abstract

We revisit the two-stage duopoly game with strategic delegation and asymmetric technologies of Sen and Stamatopoulos (2015). We show that their conclusions are driven by the restrictive assumption that the extent of delegation to managers is confined to a binary set. Allowing for a continuous set of delegation incentives, we prove that the delegation stage is a prisoners’ dilemma, the unique subgame perfect equilibrium entailing both firms hiring managers. At equilibrium, the more efficient firm makes higher profits.
2016
Flavio Delbono, Luca Lambertini, Luigi Marattin (2016). Strategic delegation under cost asymmetry. OPERATIONS RESEARCH LETTERS, 44(3), 443-445 [10.1016/j.orl.2016.04.006].
Flavio Delbono; Luca Lambertini; Luigi Marattin
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/567622
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