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| Author: | Corts, K. S. Neher, D. V. |
| Title: | Credible delegation |
| Journal: | European Economic Review
2003 : JUN, VOL. 47:3, p. 395-407 |
| Index terms: | Strategic management Decision making Competitive advantage |
| Freeterms: | Vertical delegation Strategic commitment Renegotiation Unobservable contracts |
| Language: | eng |
| Abstract: | The authors show that the vertical delegation of decision-making authority to agent firms can act as a credible strategic commitment even when contracts are unobservable if and only if multilateral delegation is combined with decentralized ownership of the egent firms. In this case, the possibility of renegotiation of other agents' contracts constrains the set of contracts acceptable to each agent. |
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