This paper demonstrates that relative-performance based strategic managerial delegation
does not lead to the equivalence of Bertrand and Cournot equilibria in the presence of
network externalities, regardless of the strength and type of network externalities—positive
or negative. In the presence of positive network externalities, under relative-performance
based delegation, Bertrand competition yields lower prices and profits, and higher
quantities, consumers surplus and welfare than Cournot competition. On the contrary, these …