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What level do disadvantaged firms weight rivals' profits in relative performance evaluations under quantity competition?

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  • Jumpei Hamamura

Abstract

In the context of quantity competition in relative performance evaluation, this study explores the weight placed on rivals' profits through two asymmetry cases—the cost difference between firms and the sequential choice of weight placed on their rivals' profits. We identify high‐cost firms in the cost asymmetry, and followers in the sequential case of weight decisions are labeled “disadvantaged” firms. Whereas the classical literature demonstrates that the weight placed on a rival's profit is negative under quantity competition, we provide theoretical evidence that the disadvantaged firm assigns a positive weight to the rival's profit under asymmetric cases.

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  • Jumpei Hamamura, 2021. "What level do disadvantaged firms weight rivals' profits in relative performance evaluations under quantity competition?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(2), pages 493-501, March.
    • Handle: RePEc:wly:mgtdec:v:42:y:2021:i:2:p:493-501
    DOI: 10.1002/mde.3249
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    3. Jumpei Hamamura & Vinay Ramani, 2023. "Social performance versus relative performance evaluation, asymmetric costs, and quantity competition under managerial delegation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(3), pages 1706-1719, April.
    4. Hirose, Kosuke & Matsumura, Toshihiro, 2022. "Common ownership and environmental Corporate Social Responsibility," Energy Economics, Elsevier, vol. 114(C).
    5. Hirose, Kosuke & Matsumura, Toshihiro, 2023. "Green transformation in oligopoly markets under common ownership," Energy Economics, Elsevier, vol. 126(C).
    6. Xu, Lili & Matsumura, Toshihiro, 2022. "Welfare-reducing price competition under relative performance delegation with convex costs," Economic Modelling, Elsevier, vol. 112(C).
    7. Jumpei Hamamura, 2022. "Weight assigned to a rival's profit by an advantaged firm in relative performance evaluation with Cournot–Bertrand competition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2838-2844, October.
    8. Liu, Yi & Matsumura, Toshihiro, 2024. "Payoff interdependence and welfare-improving location diversification," MPRA Paper 120495, University Library of Munich, Germany.

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