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R&D spillovers and strategic delegation in oligopolistic contests

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  • Matthias Kräkel

    (Department of Economics, BWL II, University of Bonn, Adenauerallee 24-42, Bonn D-53113, Germany)

Abstract

Considering oligopolistic contests with R&D spillovers and strategic delegation three results can be obtained: (1) There exist multiple asymmetric equilibria where one owner highly favors sales as a basis for his manager's incentives which drives the other firm out of the market. (2) If R&D spillovers are zero, a managerial firm will have a strong strategic advantage when competing with an entrepreneurial firm. If both owners endogenously decide about delegation, each owner's dominant strategy will be to delegate, given that the manager's reservation value is not too large. (3) If R&D spillovers are maximal, collusive market outcomes become very likely, which makes strategic delegation less important. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Matthias Kräkel, 2004. "R&D spillovers and strategic delegation in oligopolistic contests," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(3), pages 147-156.
    • Handle: RePEc:wly:mgtdec:v:25:y:2004:i:3:p:147-156
    DOI: 10.1002/mde.1142
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    References listed on IDEAS

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    Cited by:

    1. Cellini, Roberto & Lambertini, Luca & Sterlacchini, Alessandro, 2009. "Managerial incentive and the firms’ propensity to invest in product and process innovation," MPRA Paper 12935, University Library of Munich, Germany.
    2. Subhasish Chowdhury & Roman Sheremeta, 2015. "Strategically equivalent contests," Theory and Decision, Springer, vol. 78(4), pages 587-601, April.
    3. Michael Kopel & Clemens Löffler, 2008. "Commitment, first-mover-, and second-mover advantage," Journal of Economics, Springer, vol. 94(2), pages 143-166, July.
    4. Rupayan Pal, 2012. "Delegation And Emission Tax In A Differentiated Oligopoly," Manchester School, University of Manchester, vol. 80(6), pages 650-670, December.
    5. Mariel Leal & Arturo García & Sang-Ho Lee, 2021. "Sequencing R&D decisions with a consumer-friendly firm and spillovers," The Japanese Economic Review, Springer, vol. 72(2), pages 243-260, April.
    6. Rupayan Pal, 2009. "Delegation and Emission Tax in a Differentiated Oligopoly," Working Papers id:2263, eSocialSciences.
    7. Florian Englmaier, 2010. "Managerial optimism and investment choice," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(4), pages 303-310.
    8. Maria Arbatskaya & Hugo M. Mialon, 2012. "Dynamic Multi‐Activity Contests," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(2), pages 520-538, June.
    9. Johannes Münster, 2007. "Contests with investment," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(8), pages 849-862.

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