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Strategic delegation effects on Cournot and Stackelberg competition

Michelacakis, Nickolas (2016): Strategic delegation effects on Cournot and Stackelberg competition.

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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.

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