1 The Scope of Strategic Delegation in Oligopoly

This paper explores the effects of the strategic delegation, to the firms ’ R&D investments and market competition in a Cournot Oligopoly. The firms ’ owners ’ have three alternative strategies: Full delegation (FD), Short-run delegation (SD) and No delegation (ND).We found that R&D investments are higher under FD than under SD and, lower under ND than both delegation scenarios. Firms ’ output is always lower in the No delegation case, comparing to both delegation cases. If the initial marginal cost is relative low (high), then firms ’ output is lower (higher) under FD, than under SD. Secondly we investigate which delegation scenario will emerge on equilibrium. We find that the only endogenously emerging symmetrical equilibrium is Short-run delegation. Finally we determine the welfare effects of each type of delegation. We find that although welfare and production are improved under delegation, they still remain lower than their socially first best levels