Abstract
This paper distinguishes between two types of delegation: Partial Delegation and Full Delegation, in the context of both spillovers and product differentiation endogenously determined by firms. By studying all possible (symmetric and asymmetric) scenarios, we demonstrate that there are three Nash equilibrium strategy profiles for this delegation game, the Pareto optimal solution is that both firms choose Partial Delegation. Partial Delegation can increase the product variety, foster firms to spend more on R&D, encourage firms to produce high-quality goods, and increase the price and profit. However, it may decrease welfare and hurt consumers’ interests. Consequently, in private view, firms prefer Partial Delegation, but in public view, Full Delegation should be encouraged.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
