Extended Games Played by Managerial Firms with Asymmetric Costs. (13th July 2014)

• Record Type: Journal Article
• Authors: Wang, Leonard F. S.
• Other Names: Wang X. Henry Academic Editor.
• Is Part Of: Game theory. Volume 2014(2014)
• Publication Date: 2014-07-13
• Subjects: Game theory -- Periodicals; Game theory; Periodicals; 519.3
• DOI: 10.1155/2014/631097
• Languages: English
• ISSNs: 2314-6559

Abstract

Abstract : Both demand and cost asymmetries are considered in oligopoly model with managerial delegation. It shows that (i) both efficient and inefficient firms with delegation have second move advantage under quantity setting and first move advantage under price competition; (ii) the extended games under both quantity and price competition have subgame equilibria. Lastly, the social welfare of all strategy combinations is considered to find that when the efficient firm moves first and the inefficient firm moves second under price competition, the social welfare can be higher than Bertrand case, if the efficiency gap between the two firms is huge.