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Relative Performance Versus Market Share Delegation in a Vertically Related Market

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  • Leonard F. S. Wang

Abstract

This article, considering relative performance vs. market share delegation in a vertically related market, shows how the order of firms’ move and the type of delegation contract would affect the input-pricing decision of the upstream monopolist and examines which delegation contract is a dominant strategy for downstream firms. The major finding is that having considered input-price commitment and delegation decision together, input price–delegation–quantity competition order coupled with relative performance delegation is the dominant strategy for downstream rivals in a vertically related market. JEL: D21, D43, L13, L21

Suggested Citation

  • Leonard F. S. Wang, 2020. "Relative Performance Versus Market Share Delegation in a Vertically Related Market," Arthaniti: Journal of Economic Theory and Practice, , vol. 19(1), pages 16-27, June.
    • Handle: RePEc:sae:artjou:v:19:y:2020:i:1:p:16-27
    DOI: 10.1177/0976747919834740
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Vertical externality; timing order; market share delegation; relative performance delegation; market competition; differentiated goods;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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