Optimal transfer prices and technology in decentralized business groups

Optimal transfer prices and technology in decentralized business groups

Decentralized (parent-affiliates) business groups encompass independent firms sharing production resources under common administrative or financial control. In this paper, we propose a single-leader-multi-follower game where a parent firm (the leader) operates in a competitive single-product market and delegates production to profit-maximizing affiliate firms (the followers).

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