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Managerial delegation in monopoly and social welfare

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  • Rupayan Pal

Abstract

type="main" xml:lang="en"> This paper develops a model of managerial delegation in the case of monopoly, without relying on agency theory based arguments, and examines its implications for social welfare. It shows that, in the presence of network externalities, (a) it is optimal for a monopolist to offer a sales-oriented incentive scheme to her manager and (b) such managerial delegation in monopoly firm is socially desirable: both the monopolist and consumers are better off under managerial delegation than under no delegation. These results are in sharp contrast to the findings of existing studies on managerial delegation.

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  • Rupayan Pal, 2014. "Managerial delegation in monopoly and social welfare," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(4), pages 403-410, December.
    • Handle: RePEc:bla:ijethy:v:10:y:2014:i:4:p:403-410
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    References listed on IDEAS

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    Cited by:

    1. Bhattacharjee Trishita & Pal Rupayan, 2014. "Network Externalities and Strategic Managerial Delegation in Cournot Duopoly: Is There a Prisoners’ Dilemma?," Review of Network Economics, De Gruyter, vol. 12(4), pages 343-353, January.
    2. Naskar, Mili & Pal, Rupayan, 2020. "Network externalities and process R&D: A Cournot–Bertrand comparison," Mathematical Social Sciences, Elsevier, vol. 103(C), pages 51-58.

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