Successive duopoly under moral hazardWill incentive contracts persist?

  1. Marta Fernández Olmos 1
  2. Jorge Rosell Martínez 1
  3. Manuel Antonio Espitia Escuer 1
  4. Luz María Marín Vinuesa 2
  1. 1 Universidad de Zaragoza
    info

    Universidad de Zaragoza

    Zaragoza, España

    ROR https://ror.org/012a91z28

  2. 2 Universidad de La Rioja
    info

    Universidad de La Rioja

    Logroño, España

    ROR https://ror.org/0553yr311

Revista:
Journal of Industrial Engineering and Management

ISSN: 2013-0953

Any de publicació: 2009

Volum: 2

Número: 1

Pàgines: 208-229

Tipus: Article

DOI: 10.3926/JIEM..V2N1.P208-229 DIALNET GOOGLE SCHOLAR lock_openAccés obert editor

Altres publicacions en: Journal of Industrial Engineering and Management

Resum

The central purpose of this paper is to examine the incentive contract as an equilibrium phenomenon. We analyse a model of vertical differentiation in which we deal with the strategic role of the competitor’s decisions in a successive duopoly. Is it better for a processor to offer an incentive contract to an upstream producer or the spot market? We determine the equilibrium of a game in which the processors simultaneously decide whether to offer an incentive contract or to continue at the spot market to acquire their input. Our results show that under successive duopoly, offering an incentive contract constitutes the unique equilibrium solution, which highlights the incentive contract persistence.

Fuente de los datos: Dialnet