EQUIVALENCE OF COMPETITION MODE IN A VERTICALLY DIFFERENTIATED DUOPOLY WITH DELEGATION |
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| Authors: | Ya‐chin Wang Leonard Fs Wang |
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| Institution: | 1. Department of Applied Economics, National University of Kaohsiung, No. 700, Kaohsiung University Road, Nan‐Tzu District 811, Kaohsiung, Taiwan.;2. Department of Finance and Banking, Kun Shan University, Tainan Hsien 71003, Taiwan. |
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| Abstract: | This paper aims to examine the equivalence of competition mode in a vertically differentiated product market with the relative performance delegation. It demonstrates the equivalence of product quality and social welfare in this delegation game, irrespective of modes of product competition. In addition, in a three‐stage game of quality‐delegation‐quantity (or price), it shows that the delegation coefficient is different between high‐quality and low‐quality firms in an asymmetric vertical differentiated model, and a high‐quality firm makes better use of the delegation than a low‐quality firm. |
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| Keywords: | L13 L15 L21 D43 Relative performance contract equivalence outcome delegation games quality competition |
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