Strategic delegation in a Stackelberg game with multiple stages

DOI10.1142/S0219198911003039zbMATH Open1259.91003arXiv1107.3198MaRDI QIDQ3166240FDOQ3166240

Paraskevas V. Lekeas, Giorgos Stamatopoulos

Publication date: 10 October 2012

Published in: International Game Theory Review (Search for Journal in Brave)

Abstract: We analyze strategic delegation in a Stackelberg model with an arbitrary number, n, of firms. We show that the n-1 last movers delegate their production decisions to managers whereas the first mover does not. Equilibrium incentive rates are increasing in the order with which managers select quantities. Letting u_i^* denote the equilibrium payoff of the firm whose manager moves in the i-th place, we show that u_n^*>u_{n-1}^*>...>u_2^*>u_1^*. We also compare the delegation outcome of our game with that of a Cournot oligopoly and show that the late (early) moving firms choose higher (lower) incentive rates than the Cournot firms.

Full work available at URL: https://arxiv.org/abs/1107.3198

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zbMATH Keywords

delegationlate-movers' advantagesequential competition

Mathematics Subject Classification ID

Auctions, bargaining, bidding and selling, and other market models (91B26) (n)-person games, (n>2) (91A06)

Cites Work

• First Mover and Second Mover Advantages
• Unobserved Delegation
• Commitment and observability in games
• Perfect competition as the limit of a hierarchical market game
• First Mover Disadvantages with Private Information
• Games with imperfectly observable commitment
• The value of commitment in Stackelberg games with observation costs
• Imperfectly observable commitments in \(n\)-player games
• Commitment, first-mover-, and second-mover advantage

Cited In (4)

• Stackelberg leadership and managerial delegation under hyperbolic demand
• Contractual delay and efficiency in delegation games. Two-principal case
• On Delegation in Contests and the Survival of Payoff Maximizing Behavior
• Global dynamics of an oligopoly game model with nonlinear costs and strategic delegation

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