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Quota Bonuses as Localized Sales Bonuses

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  • Barna Bakó
  • András Kálecz‐Simon

Abstract

In this article, we compare quota bonuses to profit‐based evaluation and sales (quantity) bonuses in a duopoly setting with independent demand shocks. Contrary to the previous findings, we find that under certain circumstances, either quota bonuses or sales bonuses may be optimal compensation plans. This may explain the coexistence of different bonus schemes in situations where the strategic aspect of the incentive problems is relevant. Copyright © 2017 John Wiley & Sons, Ltd.

Suggested Citation

  • Barna Bakó & András Kálecz‐Simon, 2017. "Quota Bonuses as Localized Sales Bonuses," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 38(7), pages 964-970, October.
    • Handle: RePEc:wly:mgtdec:v:38:y:2017:i:7:p:964-970
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    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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