Divisionalization and delegation in oligopoly

Miguel Gonzälez-Maestre

Research output: Contribution to journalArticleResearchpeer-review

14 Citations (Scopus)

Abstract

We consider a model where oligopolistic firms create independent divisions or franchises, which subsequently delegate output decisions to managers. We show that the number of firms required to make divisionalization privately profitable is greater in our model than in previous pure divisionalization models. However, in contrast with pure delegation models, we show that the subgame perfect Nash equilibrium approaches perfect competition as divisionalization costs tends to zero, even with a small fixed number of firms.
Original languageEnglish
Pages (from-to)321-338
JournalJournal of Economics and Management Strategy
Volume9
Issue number3
DOIs
Publication statusPublished - 1 Jan 2000

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