A PYMNTS Company

Vertical Integration and Managerial Contracts: Strategic Tools in Imperfect Markets

By  |  April 11, 2017

By Flavio Jacome, Andrés Mejia Villa & Karen Mendoza Manjarres

This paper analyzes a Bertrand competition model with differentiated goods, in order to determine optimal decisions when the owners can use vertical integration and managerial contracts as strategic tools. The equilibrium results are: i) the owners always delegate control to a manager who is encouraged to be less aggressive in sales; ii) there is no vertical integration when goods are highly homogeneous. iii) social welfare is never the highest that can be achieved.

Fuente: SSRN

¿Busca más noticias? Suscríbase a nuestros boletines y conviértase en miembro de CPI para mantenerse al tanto de lo último en el mundo de la competencia económica.