The impact of technology transfer on managerial delegation under vertical product differentiation

Abstract This paper analyzes the impact of technology transfer on managerial delegation contracts. Under price competition, if technology transfer occurs, it increases the level of managerial delegation of a firm producing low‐quality product. When the degree of technology transfer is relatively high, technology transfer improves the managerial delegation of producing high‐quality products. When the degree of technology transfer is relatively low, technology transfer reduces the managerial delegation of firms producing high‐quality products. Under quantity competition, technology transfer reduces the managerial delegation coefficient of all firms. We further analyze the Stackelberg competition and the royalty situation.