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The welfare effect of release timing of relative performance evaluation under quantity competition and asymmetric costs

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  • Jumpei Hamamura
  • Vinay Ramani

Abstract

We examine the welfare effects of the endogenous decision and release timing of weight placed on the rival's profits under relative performance evaluation with quantity competition and asymmetric marginal costs. We find that when the advantaged firm decides and releases the weight as the leader, it always chooses a negative weight on relative performance evaluation, whereas the disadvantaged firm may choose a positive or negative weight depending on the degree of product substitution. Furthermore, we demonstrate that while all firms prefer to release weights early, this situation does not improve social welfare in several economic environments.

Suggested Citation

  • Jumpei Hamamura & Vinay Ramani, 2024. "The welfare effect of release timing of relative performance evaluation under quantity competition and asymmetric costs," Scottish Journal of Political Economy, Scottish Economic Society, vol. 71(3), pages 416-438, July.
    • Handle: RePEc:bla:scotjp:v:71:y:2024:i:3:p:416-438
    DOI: 10.1111/sjpe.12374
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