This paper applies an unconstrained Hotelling linear city model to study the effects of managerial delegation on the firms’ location/product differentiation level in a duopoly industry. It is shown that managerial delegation strongly affects firms’ location/product differentiation choice, both in the simultaneous and sequential moves in one of the three‐stage location‐incentive‐pricing game structure of the model. While sequential moves in the location distance/quality differentiation stage decrease the distance among firms, sequential moves in the incentive‐pricing stages increase it. The social welfare consequences are analysed.
This paper investigates the impact of the crowd effect and financing constraints on pricing strategy by constructing an intertemporal model and introducing the crowd effect into a monopolistic home team's decision‐making framework. The results demonstrate that a stronger crowd effect and a larger depreciation rate are always beneficial to the expected profits of the home team and the home team may price along the inelastic portion of the static demand curve in periods 1–3, as long as the expected deferred marginal revenue and the additive price from the performance of the preceding match are sufficiently large.
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