X-Inefficiency, Competition and Market Information
AbstractWhether competition forces firms toward efficient behavior is an open question. The authors consider a duopoly with firms run by managers and affected by adverse selection on costs. In contrast to recent literature, they point out that, to have a genuine effect on firm X-inefficiency, competition must change managerial incentives. By introducing the availability of some signal on the rivals' behavior, the authors show that, if costs are correlated, the contractual use of that signal can render private managerial information uninfluential. This result stresses the informational role of the market and suggests scope for future work. Copyright 1997 by Blackwell Publishing Ltd
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Industrial Economics.
Volume (Year): 45 (1997)
Issue (Month): 4 (December)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821
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- Riccardo Martina & Salvatore Piccolo, 2011. "A Note on the Value of Residual Claimancy with Competing Vertical Hierarchies," CSEF Working Papers 291, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Marcello D'Amato & Riccardo Martina & Salvatore Piccolo, 2005. "Endogenous Managerial Contract," CSEF Working Papers 148, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Jul 2006.
- Piccolo, Salvatore & D'Amato, Marcello & Martina, Riccardo, 2008. "Product market competition and organizational slack under profit-target contracts," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1389-1406, November.
- Marco Pagnozzi & Salvatore Piccolo, 2012. "Information Sharing between Vertical Hierarchies," CSEF Working Papers 322, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Salvatore Piccolo, 2011. "Communicating Vertical Hierarchies: the Adverse Selection Case," CSEF Working Papers 273, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
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