On the (non) existence of a price equilibrium in delegation games with relative performance compensation

Michael Kopel, Luca Lambertini

We show that Miller and Pazgal.s (2001) model of strategic delegation, in which managerial incentives are based upon relative performance, is affected by a non-existence problem which has impact on the price equilibrium. The undercutting incentives generating this result are indeed similar to those affecting the stability of price cartels.

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Year of publication:	January 16, 2012
Authors:	Kopel, Michael ; Lambertini, Luca
Publisher:	Bologna, Italy : Alma Mater Studiorum - Università di Bologna, Department of Economics
Subject:	managerial firms \| Bertrand competition \| delegation \| equilibrium existence \| Prinzipal-Agent-Theorie \| Agency theory \| Duopol \| Duopoly \| Spieltheorie \| Game theory \| Gleichgewichtstheorie \| Equilibrium theory \| Gleichgewichtsmodell \| Equilibrium model \| Preiswettbewerb \| Price competition \| Nash-Gleichgewicht \| Nash equilibrium \| Führungskräfte \| Managers \| Oligopol \| Oligopoly \| Leistungsentgelt \| Performance pay

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