Long-Term or Short-Term Managerial Incentive Contracts
AbstractThis paper deals with the strategic role of the temporal dimension of contracts in a duopoly market. Is it better for a firm to sign long-term incentive contracts with managers or short-term contracts? For the linear case, with strategic substitutes (complements) in the product market, the incentive variables are also strategic substitutes (complements). It is shown that a long-term contract makes a firm a leader in incentives, while a short-term contract makes it a follower. We find that, under Bertrand competition, in equilibrium one firm signs a long-term contract and the other firm short-term incentive contracts; however, under Cournot competition, the dominant strategy is to sign long-term incentive contracts. Copyright 1996 The Massachusetts Institute of Technology.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.
Volume (Year): 5 (1996)
Issue (Month): 3 (09)
Contact details of provider:
Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- L. Lambertini & G. Primavera, 2000. "Delegation vs Cost-Reducing R&D in a Cournot Duopoly," Working Papers 377, Dipartimento Scienze Economiche, Universita' di Bologna.
- Juan Carlos Bárcena-Ruiz & F. Javier Casado-Izaga, 2005. "Spatial competition and the duration of managerial incentive contracts," Investigaciones Economicas, Fundación SEPI, vol. 29(2), pages 331-349, May.
- L. Lambertini & M. Trombetta, 1997. "May Delegation Affect Firms' Ability to Collude?," Working Papers 275, Dipartimento Scienze Economiche, Universita' di Bologna.
- Luca Lambertini, 1996.
"Strategic Delegation and the Shape of Market Competition,"
267, Dipartimento Scienze Economiche, Universita' di Bologna.
- Lambertini, Luca, 2000. "Strategic Delegation and the Shape of Market Competition," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(5), pages 550-70, November.
- Luca Lambertini, 1997. "Strategic Delegation and the Shape of Market Competition," Discussion Papers 97-01, University of Copenhagen. Department of Economics.
- Luca Lambertini, 2000.
"Extended Games Played by Managerial Firms,"
The Japanese Economic Review,
Japanese Economic Association, vol. 51(2), pages 274-283, 06.
- Carlos Barcena-Ruiz, Juan & Paz Espinosa, Maria, 1999. "Should multiproduct firms provide divisional or corporate incentives?," International Journal of Industrial Organization, Elsevier, vol. 17(5), pages 751-764, July.
- Barcena-Ruiz, Juan Carlos & Casado-Izaga, F. Javier, 2005. "Should shareholders delegate location decisions?," Research in Economics, Elsevier, vol. 59(3), pages 209-222, September.
- Barcena-Ruiz, Juan Carlos & Campo, Maria Luz, 2000. "Short-term or long-term labor contracts," Labour Economics, Elsevier, vol. 7(3), pages 249-260, May.
- Ramón Faulí-Oller & Antonia Díaz, 1999. "- Competition And Privatization," Working Papers. Serie AD 1999-13, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Iván Barreda-Tarrazona & Nikolaos Georgantzís & Constantine Manasakis & Evangelos Mitrokostas & Emmanuel Petrakis, 2012. "Managerial compensation contracts in quantity-setting duopoly," Working Papers 2012/17, Economics Department, Universitat Jaume I, Castellón (Spain).
- Bárcena Ruiz, Juan Carlos & Casado Izaga, Francisco Javier, 1999. "Should Owners of Firms Delegate Long-run Decisions?," BILTOKI 1999-11, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.