Asymmetric Choice of Relative‐Performance Delegation Under Duopoly Competition With Vertical Product‐Quality Difference

ABSTRACT In this paper, we reexamine the optimal weights on relative performance delegation under price and quantity competition modes with double product differentiation (horizontal product differentiation and vertical product‐quality differentiation) pinpointing the strategic asymmetric choice of delegation due to vertical product‐quality differentiation. Because the consumers are willing to pay more for higher quality products and for the firm to maintain its reputation, the firm may limit its supply of product without having aggressive selling effort.