Endogenous Strategic Managerial Incentive Contracts
AbstractThis paper studies the endogenous structure of incentive contracts that firms' owners offer to their managers, when these contracts are linear combinations either of own profits and own revenues, or of own profits and competitor's profits or, finally, of own profits and own market share. In equilibrium, each owner has a dominant strategy to reward his manager with a contract combining own profits and competitor's profits. Contrary to the received literature, the case where there is no ex-ante commitment over any type of contract that each owner offers to his manager is also examined. In equilibrium, each type of contract is an owner's best response to the competing owner's choice.
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Bibliographic InfoPaper provided by University of Crete, Department of Economics in its series Working Papers with number 0706.
Date of creation: 23 Jan 2007
Date of revision:
Oligopoly; Managerial delegation; Endogenous contracts;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-28 (All new papers)
- NEP-BEC-2007-01-28 (Business Economics)
- NEP-COM-2007-01-28 (Industrial Competition)
- NEP-MIC-2007-01-28 (Microeconomics)
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