This paper studies how the separation of ownership and management affects firms’ location decisions in a model of price competition with concentrated consumer demand. Strategic location decisions are made by the owners themselves, whereas operational price decisions are delegated to managers. It is shown that the impact of manager delegation on locations, prices and profits crucially depends on the shape of the demand distribution. When the distribution is “broad-peaked”, delegation leads to more distant locations, higher prices and profits. However, “narrow-peaked” distributions reverse the delegation effect on location and can even lead to lower prices and profits.
