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Will managerial delegation impede upstream collusion?

Author

Listed:
  • Leonard F. S. Wang

    (Zhongnan University of Economics and Law)

  • Han Wang

    (The Ohio State University)

Abstract

We investigate the collusive incentive for far-sighted manufacturers selling via managerial retailers. In contrast to the existing literature, we find that revenue delegation can impede upstream collusion in Bertrand models. This happens due to market exit in the deviation phase when products are close substitutes. The result of managerial delegation hindering upstream collusion is robust if we allow manufacturers to consider partial collusion. Furthermore, we show that less intensified downstream competition does not always harm consumers. If upstream collusion is less sustainable with managerial retailers, consumers can be better-off.

Suggested Citation

  • Leonard F. S. Wang & Han Wang, 2021. "Will managerial delegation impede upstream collusion?," Journal of Economics, Springer, vol. 134(2), pages 127-146, October.
    • Handle: RePEc:kap:jeczfn:v:134:y:2021:i:2:d:10.1007_s00712-021-00741-z
    DOI: 10.1007/s00712-021-00741-z
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    References listed on IDEAS

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    Cited by:

    1. Jen-Yao Lee & Chen-Chia Fan & Chien-Shu Tsai, 2023. "Network Externalities and Downstream Collusion under Asymmetric Costs: A Note," Games, MDPI, vol. 14(2), pages 1-11, March.
    2. Lee, Jen-Yao & Wang, Leonard F. S. & Sun, Ji, 2022. "Relative-performance delegation destabilizes upstream collusion," MPRA Paper 114939, University Library of Munich, Germany, revised 12 Oct 2022.
    3. Bin Ying & Leonard F. S. Wang & Qidi Zhang, 2023. "Upstream collusion and corporate social responsibility in downstream competition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1020-1028, March.

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    More about this item

    Keywords

    Collusion; Delegation; Price competition; Vertical channel;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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