Social performance versus relative performance evaluation, asymmetric costs, and quantity competition under managerial delegation

Abstract

Abstract This paper considers asymmetric performance evaluation measures in a duopoly with asymmetric costs and managerial delegation under quantity competition. Asymmetry along performance measures as well as cost leads to a several surprising results. First, we find that the social performance firm with a cost advantage earns a larger profit than its rival under a specific economic environment. Second, when the relative performance firm has the cost advantage, both firms adopt a less aggressive strategy under specific conditions, while the relative performance firm always earns a larger profit than its rival.