TEL  Vol.2 No.4 , October 2012
Strategic Delegation in Price Competition
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 intra- 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.

Cite this paper
W. Güth, K. Pull and M. Stadler, "Strategic Delegation in Price Competition," Theoretical Economics Letters, Vol. 2 No. 4, 2012, pp. 355-360. doi: 10.4236/tel.2012.24065.
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