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Strategic delegation and network externalities under export rivalry market

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  • Kangsik Choi
  • Ki‐Dong Lee

Abstract

In the presence of network externalities, this study examines the endogenous delegation structure in an export rivalry market with import tariff under Bertrand competition. Contrast to previous works, we show that (i) with strong (weak) network externalities, choosing delegation for exporters is a dominant strategy, which implies the managerial delegation for output expansion (restriction) is socially desirable; (ii) with intermediate network externalities, the exporters choose no delegation in equilibrium; (iii) compared to no delegation, a smaller import tariff further increases both exporters incentives, consumer surplus and social welfare to choose delegation for output expansion unless the strength of network externalities is small; and (iv) hence, two contrasting prisoner’s dilemmas occur in the Bertrand competition when the network effect is medium‐sized.

Suggested Citation

  • Kangsik Choi & Ki‐Dong Lee, 2022. "Strategic delegation and network externalities under export rivalry market," Manchester School, University of Manchester, vol. 90(1), pages 1-19, January.
    • Handle: RePEc:bla:manchs:v:90:y:2022:i:1:p:1-19
    DOI: 10.1111/manc.12381
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    References listed on IDEAS

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    Cited by:

    1. Kangsik Choi, 2022. "Organizational form and multiple exportable goods in export rivalry trade," Manchester School, University of Manchester, vol. 90(5), pages 565-586, September.

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