دانلود رایگان مقاله انگلیسی استراتژیک کوتاه مدت: پیامدهای مدیریت و کسب ارتباط با مشتری - الزویر 2018

abstract

We study a duopoly model of history-based price competition with switching costs and demonstrate how strategic history-based pricing induces the owners of the firms to implement managerial short-termism by delegating the pricing decisions to managers with a discount factor lower than that of the owners. Managerial short-termism is a strategic device whereby owners can soften price competition at the stage when customer relationships are established. The degree of short short-termism is shown to depend on the market structure, the intensity of competition and the magnitude of switching costs.

Concluding comments

In this study we have designed a duopoly model of history-based price competition with switching costs. We have demonstrated how strategic history-based pricing competition induces the owners of the firms to implement short-termism by delegating the pricing decisions to managers with a discount factor lower than that of the owners. This delegation equilibrium can also be interpreted as an equilibrium where managers are offered contracts with a probability of renewal lower than the discount factors of the owners. Our analysis establishes analytically that for an arbitrary exogenous initial market share allocation, the subgame perfect equilibrium configuration is characterized by strategic delegation to completely myopic agents independently of whether the firms compete with a horizon of two or infinitely many periods unless switching costs are strongly increasing over time. Our analysis also covers an environment where we endogenize the initial market shares by focusing on price competition with differentiated products and a two-period horizon. The feature with delegation to managers operating with lower discount rates than those of the owners is robust to such an extension. However, whether the extreme myopia is optimal or whether the managers are offered contracts with a strictly positive discount factor lower than that of the owners crucially depends on the parameters of the model – the magnitude of the switching costs, the measure capturing market power in the initial period and the discount factor of the owners. Overall, we establish that the degree of short-termism is determined by balancing the incentives to exploit market power in the initial period against the incentives to benefit from switching costs in the second period.