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Silence is golden: communication, silence, and cartel stability

Basuchoudhary, Atin; Conlon, John R. - Volkswirtschaftliche Fakultät, … - 2013

This paper studies how cartel stability is influenced by asymmetric information and communication about demand. Firms … its partners and another where it does not. We show that cartels are extremely unstable when the informed firm … communicates with the uninformed firms. However, when the informed firm does not communicate with the uninformed firms cartels can …

Persistent link: https://www.econbiz.de/10011110577

Market Value Maximization through Strategic Delegation

Wang, Shinn-Shyr; Stiegert, Kyle W. - Agricultural and Applied Economics Association - AAEA - 2007

In this paper, we develop a model of strategic delegation in which shareholders maintain an objective of market value maximization (MVM) of the firm's assets as measured by a capital asset pricing model (CAPM). Optimal delegation requires that managers maximize a linear combination of expected...

Persistent link: https://www.econbiz.de/10005476733

A Model of Strategic Delegation in Contests between Groups

Brandauer, Stefan; Englmaier, Florian - CESifo - 2006

We analyze a contest between two groups where group members have differing valuations for the contested rent. Generically the pivotal group member with the median valuation of the rent will not act himself but will want to send a group member that has preferences different to her own into the...

Persistent link: https://www.econbiz.de/10005406314

Cost Pass-Through under Delegation

Ritz, Robert - In: Topics in Theoretical Economics 8 (2009) 1, pp. 1383-1383

The rate of cost pass-through exceeds 50% under strategic delegation of decision-making to managers with sales revenue contracts--regardless of the number of firms in the industry and demand curvature. This contrasts sharply with profit-maximization, for which cost pass-through can take on any...

Persistent link: https://www.econbiz.de/10005458925

Strategic commitment to pursue a goal other than profit in a Cournot duopoly

Rtischev, Dimitry - Volkswirtschaftliche Fakultät, … - 2012

Competition among profit-seeking firms in an oligopolistic industry inherently generates incentives for firms to commit to maximize a performance metric other than profit. We briefly review the underlying theory, analyze its ramifications in a Cournot duopoly, and consider feasibility...

Persistent link: https://www.econbiz.de/10011109023

A note on bargaining power and managerial delegation in multimarket oligopolies

Ciarreta Antuñano, Aitor; García Enríquez, Javier; … - Departamento de Fundamentos del Análisis Económico … - 2012

In a two-stage delegation game model with Nash bargaining between a manager and an owner, an equivalence result is found between this game and Fershtman and Judd's strategic delegation game (Fershtman and Judd, 1987). Interestingly, although both games are equivalent in terms of profits under...

Persistent link: https://www.econbiz.de/10011158383

Why does Centralisation fail to internalise Policy Externalities?

Dur, Robert A.J.; Roelfsema, Hein J. - Tinbergen Instituut - 2002

We provide an explanation why centralisation of political decision makingresults in overspending in some policy domains, whereas too low spending persists in others.We study a model in which delegates from jurisdictions bargain over local public goods provision.If all of the costs of public...

Persistent link: https://www.econbiz.de/10011256583

The Citizen-Candidate Model with Imperfect Policy Control

Aytimur, R. Emre; Boukouras, Aristotelis; Schwagerz, Robert - Department of Economics, Leicester University - 2015

We present a modified citizen-candidate model where the implemented policy arises from a compromise between the government and an unelected external power. We show that the two-candidate equilibria of this model differ significantly from the original: however small the cost of candidacy, the...

Persistent link: https://www.econbiz.de/10011265722

Separation of Ownership and Control: Delegation as a Commitment Device

Boukouras, Aristotelis - Department of Economics, Leicester University - 2015

This paper provides a theoretical model for explaining the separation of ownership and control in fi rms. An entrepreneur hires a worker for providing effort to complete a project. The worker's effort determines the probability that the project is completed on time, but the worker receives...

Persistent link: https://www.econbiz.de/10011265723

Consumer Standards as a Strategic Device to Mitigate Ratchet Effects in Dynamic Regulation

Fiocco, Raffaele; Strausz, Roland - C.E.P.R. Discussion Papers - 2014

Strategic delegation to an independent regulator with a pure consumer standard improves dynamic regulation by mitigating ratchet effects associated with short term contracting. A pure consumer standard alleviates the regulator's myopic temptation to raise output after learning the firm is...

Persistent link: https://www.econbiz.de/10011083936