On Price Competition with Market Share Delegation Contracts


Institute of Organization and Economics of Institutions, University of Graz, Universitätsstraße 15/E4, 8010, Graz, Austria. E-mail: michael.kopel@uni-graz.at


We identify a mistake in the specification of the demand system used in the strategic delegation model based on market shares by Jansen, van Lier and van Witteloostuijn, whereby the price remains above marginal cost when goods are homogeneous. After amending this aspect, we perform a profit comparison with the alternative delegation scheme à la Fershtman and Judd (1987). Copyright © 2012 John Wiley & Sons, Ltd.