Organizational Governance, Leadership, and the Influence of Competition

This paper studies the emergence of firm asymmetry as an equilibrium outcome. We consider differentiated Cournot and Bertrand duopolies where firms endogenously select their organizational governance and their timing strategy. For Cournot competition asymmetric and symmetric equilibria may occur. In an asymmetric equilibrium, firms always select different organizational structures. In Bertrand competition, firms always select different timing strategies at the market stage, but may select the same organizational structure. For Bertrand competition we observe that firm profits are nonmonotonic in the intensity of competition, so that firms might be better off if the intensity of competition between firms increases.