An industry where managerial firms and entrepreneurial firms coexist is considered. We analyze the effects of increasing competitiveness, defined by the increase in the number of managerial firms, on the equilibrium managerial incentive scheme. Our analysis shows that an increase in the number of managerial firms would induce a managerial firm to tie the incentives more closely to profits. We also compare the equilibrium with the regular Cournot model. Copyright 2002 by Kluwer Academic Publishers
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