Strategic delegation effects on Cournot and Stackelberg competition

Nickolas J. Michelacakis

doi:10.3934/jdg.2018015

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2018, Volume 5, Issue 3: 231-242. Doi: 10.3934/jdg.2018015

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Strategic delegation effects on Cournot and Stackelberg competition

Nickolas J. Michelacakis

University of Piraeus, Economics Department, 80 Karaoli & Dimitriou Strs., 185 34, Greece

Received: January 2018

Revised: March 2018

Published online: July 23, 2018

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Abstract

This paper compares the outcomes of two three-stage games of two firms competing for quantity with managerial delegation. In fact, we prove that simultaneous choice of managers by the proprietors of the firms followed by Stackelberg-type competition is equivalent to sequential choice of managers followed by Cournot-type competition. We prove equivalence in a general setting, namely, when the duopolistic model is characterised by a non-linear inverse demand function of the form $p_i = a-(q_i)^n-γ (q_j)^n$, $i,j = 1,2$ and $n∈\mathbb{N}$.

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Mathematics Subject Classification: Primary: 91B38; Secondary: 91B40.

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References

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