Competition Reduces X-Inefficiency - A Note on a Limited Liability Mechanism
Abstract
The study illustrates that a financial restriction may serve as a disciplining device on the internal efficiency of a firm, and that the disciplining power is higher the tougher the product market competition is. The financial restriction is modeled as a limited liability constraint, that is a non-negative profit constraint. Hence, this limited liability mechanism may, in part, account for the disciplining power of product market competition on firm efficiency, alleged by policy makers as well as economists.(This abstract was borrowed from another version of this item.)
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Bibliographic Info
Paper provided by Stockholm - International Economic Studies in its series Papers with number 599.Length: 28 pages
Date of creation: 1995
Date of revision:
Handle: RePEc:fth:stocin:599
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Related research
Keywords: COMPETITION; FINANCIAL MARKET; ENTERPRISES; CREDIT;Other versions of this item:
- Stennek, Johan, 1997. "Competition Reduces X-Inefficiency - A note on a Limited Liability Mechanism," Seminar Papers 599, Stockholm University, Institute for International Economic Studies.
- Stennek, J., 1995. "Competition Reduces X-Inefficiency : A Note on a Limited Liability Mechanism," Discussion Paper 1995-56, Tilburg University, Center for Economic Research.
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
- G39 - Financial Economics - - Corporate Finance and Governance - - - Other
References
References listed on IDEASPlease report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Horn, H. & Lang, H. & Lundgren, S., 1991.
"Competition, Long Run Contracts and Internal Inefficiencies in Firms,"
Papers
506, Stockholm - International Economic Studies.
- Horn, Henrik & Lang, Harald & Lundgren, Stefan, 1994. "Competition, long run contracts and internal inefficiencies in firms," European Economic Review, Elsevier, vol. 38(2), pages 213-233, February.
- Martin Stephen, 1993. "Endogenous Firm Efficiency in a Cournot Principal-Agent Model," Journal of Economic Theory, Elsevier, vol. 59(2), pages 445-450, April.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716.
- Nalebuff, Barry J & Stiglitz, Joseph E, 1983. "Information, Competition, and Markets," American Economic Review, American Economic Association, vol. 73(2), pages 278-83, May.
- Hermalin, Benjamin E., 1991.
"The Effects of Competition on Executive Behavior,"
Department of Economics, Working Paper Series
qt7m13v5dd, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Benjamin E. Hermalin, 1992. "The Effects of Competition on Executive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 23(3), pages 350-365, Autumn.
- Benjamin E. Hermalin., 1991. "The Effects of Competition on Executive Behavior," Economics Working Papers 91-182, University of California at Berkeley.
- Schmidt, Klaus M., 1996.
"Managerial Incentives and Product Market Competition,"
CEPR Discussion Papers
1382, C.E.P.R. Discussion Papers.
- Schmidt, Klaus M, 1997. "Managerial Incentives and Product Market Competition," Review of Economic Studies, Wiley Blackwell, vol. 64(2), pages 191-213, April.
- Horn, Henrik & Lang, Harald & Lundgren, Stefan, 1995.
"Managerial effort incentives, X-inefficiency and international trade,"
European Economic Review,
Elsevier, vol. 39(1), pages 117-138, January.
- Horn, H. & Lang, H. & Lundgren, S., 1991. "Managerial Effort Incentives, X-Inefficiency and International Trade," Papers 507, Stockholm - International Economic Studies.
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