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

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  • Dimitry Rtischev

Abstract

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 constraints from the perspective of strategic management.

Suggested Citation

  • Dimitry Rtischev, 2012. "Strategic commitment to pursue a goal other than profit in a Cournot duopoly," Gakushuin Economic Papers, Gakushuin University, Faculty of Economics, vol. 49(2), pages 133-142.
    • Handle: RePEc:abc:gakuep:49-2-4
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    References listed on IDEAS

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    1. Gehrig, Thomas & Guth, Werner & Levinsky, Rene, 2004. "The commitment effect in belief evolution," Economics Letters, Elsevier, vol. 85(2), pages 163-166, November.
    2. Heifetz, Aviad & Shannon, Chris & Spiegel, Yossi, 2007. "What to maximize if you must," Journal of Economic Theory, Elsevier, vol. 133(1), pages 31-57, March.
    3. Eyal Winter & Ignacio Garcia-Jurado & Jose Mendez-Naya & Luciano Mendez-Naya, 2009. "Mental Equilibrium and Rational Emotions," Discussion Paper Series dp521, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    4. Nolan Miller & Amit Pazgal, 2002. "Relative performance as a strategic commitment mechanism," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(2), pages 51-68.
    5. Blinder Alan S., 1993. "A Simple Note on the Japanese Firm," Journal of the Japanese and International Economies, Elsevier, vol. 7(3), pages 238-255, September.
    6. Florian Englmaier, 2011. "Commitment in R&D tournaments via strategic delegation to overoptimistic managers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 32(1), pages 63-69, January.
    7. Fershtman, Chaim & Judd, Kenneth L, 1987. "Equilibrium Incentives in Oligopoly," American Economic Review, American Economic Association, vol. 77(5), pages 927-940, December.
    8. Dufwenberg, Martin & Guth, Werner, 1999. "Indirect evolution vs. strategic delegation: a comparison of two approaches to explaining economic institutions," European Journal of Political Economy, Elsevier, vol. 15(2), pages 281-295, June.
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    Cited by:

    1. Yi-Ling Cheng & Hai-Han Kao, 2019. "Product quality and endogenous firm objectives," Asia-Pacific Journal of Regional Science, Springer, vol. 3(3), pages 813-830, October.

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    More about this item

    Keywords

    oligopolistic competition; strategic commitment; strategic delegation;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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