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Managerial Job Assignment and Imperfect Competition in Asymmetric Equilibrium

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  • Grossmann, Volker

    ()
    (University of Fribourg)

Abstract

This paper develops a model with multiple market locations in which the quality of intangible assets of firms, provided by management, determines the firms’ performance. Despite an ex ante symmetry of potential entrants, the equilibrium assignment of heterogeneous managerial skills to firms tends to be asymmetric. This sorting outcome determines both the goods market structure at single locations and the size distribution of firms. Results are consistent with a number of observed patterns regarding the size distribution of firms and establishments, and the relation of firm size to profitability, productivity, managerial skills and manager remuneration.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 738.

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Length: 47 pages
Date of creation: Mar 2003
Date of revision:
Publication status: published as 'Firm Size, Productivity, and Manager Wages: A Job Assignment Approach' in: B.E. Journal of Theoretical Economics: Advances in Theoretical Economics, 2007, 7 (1), Article 8
Handle: RePEc:iza:izadps:dp738

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Keywords: asymmetric equilibrium; firm size; intangible assets; managerial job assignment;

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References

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Cited by:
  1. Bayer, Christian & Burhop, Carsten, 2009. "Corporate governance and incentive contracts: Historical evidence from a legal reform," Explorations in Economic History, Elsevier, Elsevier, vol. 46(4), pages 464-481, October.
  2. Christian Bayer & Carsten Burhop, 2008. "A Corporate Governance Reform as a Natural Experiment for Incentive Contracts," Schmalenbach Business Review (sbr), LMU Munich School of Management, LMU Munich School of Management, vol. 60(4), pages 378-399, October.

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