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R&D spillovers and strategic delegation in oligopolistic contests

✍ Scribed by Matthias Kräkel

Publisher
John Wiley and Sons
Year
2004
Tongue
English
Weight
149 KB
Volume
25
Category
Article
ISSN
0143-6570

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✦ Synopsis

Abstract

Considering oligopolistic contests with R&D spillovers and strategic delegation three results can be obtained: (1) There exist multiple asymmetric equilibria where one owner highly favors sales as a basis for his manager's incentives which drives the other firm out of the market. (2) If R&D spillovers are zero, a managerial firm will have a strong strategic advantage when competing with an entrepreneurial firm. If both owners endogenously decide about delegation, each owner's dominant strategy will be to delegate, given that the manager's reservation value is not too large. (3) If R&D spillovers are maximal, collusive market outcomes become very likely, which makes strategic delegation less important. Copyright © 2004 John Wiley & Sons, Ltd.

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