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Cooperative managerial delegation revisited: Including the firm's cost as a managerial objective

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  • Kojun Hamada

Abstract

In this study, we revisit cooperative managerial delegation when firms choose both the level of output and R&D investment in an oligopolistic competition. A previous study concludes that if managers choose the output and R&D levels, the fully collusive outcome cannot be achieved through cooperative managerial delegation. By contrast, we show that when owners cooperatively offer managers an incentive scheme consisting of a linear combination of profit, revenue, and cost, they can achieve the fully collusive outcome. The result suggests that firms require a more elaborate incentive scheme to achieve the collusion outcome by controlling both strategic variables.

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  • Kojun Hamada, 2021. "Cooperative managerial delegation revisited: Including the firm's cost as a managerial objective," Bulletin of Economic Research, Wiley Blackwell, vol. 73(2), pages 171-178, April.
    • Handle: RePEc:bla:buecrs:v:73:y:2021:i:2:p:171-178
    DOI: 10.1111/boer.12240
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    References listed on IDEAS

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