Competition and cooperation within a multidivisional firm

  1. FAULI OLLER, RAMON 1
  2. GIRALT, MAGDALENA
  1. 1 Universitat d'Alacant
    info

    Universitat d'Alacant

    Alicante, España

    ROR https://ror.org/05t8bcz72

Revista:
The Journal of Idustrial Economics

ISSN: 0022-1821,  1467-6451

Año de publicación: 1995

Volumen: 43

Número: 1

Páginas: 77-99

Tipo: Artículo

DOI: 10.2307/2950426 WoS: WOS:A1995QJ24400005 DIALNET GOOGLE SCHOLAR lock_openAcceso abierto editor

Otras publicaciones en: The Journal of Idustrial Economics

Resumen

The strategic choice of managerial incentives is studied in a multi-agent setting using a two-stage game. In the first stage, the principal chooses incentive schemes. Then, agents make their decisions. The game models the structure of multidivisional firms; divisions (agents) are managed independently, but the general office (principal) monitors their performance and provides incentives. It explains the rationale for establishing either cooperation or competition across divisions if firms face Cournot competition. If divisions are linked because of technological reasons (positive spillovers) cooperation should be stimulated. If they sell substitute products (negative spillovers) competition is needed.