Successive duopoly under moral hazard: Will incentive contracts persist?
The central purpose of this paper is to examine the incentive contract as an equilibrium phenomenon. We analyse a model of vertical differentiation in which we deal with the strategic role of the competitor’s decisions in a successive duopoly. Is it better for a processor to offer an incentive co...
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| Tác giả chính: | , , , |
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| Năm xuất bản: |
OmniaScience
2018
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| Chủ đề: | |
| Truy cập Trực tuyến: | http://lrc.quangbinhuni.edu.vn:8181/dspace/handle/DHQB_123456789/3732 |
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| Tóm tắt: | The central purpose of this paper is to examine the incentive contract as an
equilibrium phenomenon. We analyse a model of vertical differentiation in which we deal
with the strategic role of the competitor’s decisions in a successive duopoly. Is it better for
a processor to offer an incentive contract to an upstream producer or the spot market? We
determine the equilibrium of a game in which the processors simultaneously decide
whether to offer an incentive contract or to continue at the spot market to acquire their
input. Our results show that under successive duopoly, offering an incentive contract
constitutes the unique equilibrium solution, which highlights the incentive contract
persistence |
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