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Delegation in Oligopoly: Managerial Schemes and Loan Commitments

Author

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  • M. Paz Coscollá

    (Department of Economic Analysis, University of València, Avda. Dels Tarongers, E-46022 València, Spain (e-mails: paz.coscolla@uv.es; luis.m.granero@uv.es))

  • Luis M. Granero

    (Department of Economic Analysis, University of València, Avda. Dels Tarongers, E-46022 València, Spain (e-mails: paz.coscolla@uv.es; luis.m.granero@uv.es))

Abstract

This paper examines an industry in which firms must arrange financing for the production levels they plan to undertake in equilibrium. Financing can rely on the spot, or it can be obtained from options in the form of loan commitments. In that context, we analyze whether the owners of the firms centralize financing and output decisions or delegate these decisions to managers. We show a multiplicity of equilibria from a number of organizational modes under delegation. An organizational form where the owner decides on short-term financing but delegates production with a long-term managerial scheme is not an equilibrium organizational form.

Suggested Citation

  • M. Paz Coscollá & Luis M. Granero, 2003. "Delegation in Oligopoly: Managerial Schemes and Loan Commitments," Journal of Economics, Springer, vol. 78(3), pages 223-237, March.
    • Handle: RePEc:kap:jeczfn:v:78:y:2003:i:3:d:10.1007_s00712-002-0570-9
    DOI: 10.1007/s00712-002-0570-9
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    Cited by:

    1. Xubei Lian & Kai Zhang & Leonard F. S. Wang, 2023. "Managerial delegation, network externalities and loan commitment," Manchester School, University of Manchester, vol. 91(1), pages 37-54, January.
    2. Fanti, Luciano & Gori, Luca, 2011. "Stability analysis in a Cournot duopoly with managerial sales delegation and bounded rationality," MPRA Paper 33828, University Library of Munich, Germany.
    3. Jine Qian & Qiang Gong & Leonard F.S. Wang, 2021. "Corporate social responsibility, loan commitment, and social welfare in network duopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(4), pages 952-960, June.

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