Managers Compensation and Collusive Behaviour under Cournot Oligopoly
AbstractThe aim of the present paper is to show that the existence of a concrete outside option for firms' executives can induce, under specific circumstances, every firm to adopt restrictive output practises. In particular, the paper characterizes the conditions for which, under Cournot oligopoly, existing firms behave more collusively than in a standard Cournot model. It is also shown that room exists for perfect and stable collusive agreements amongst firms. Other interesting findings are also twofold. Firstly, that the equilibrium executives' pay will usually be dependant upon the number of companies initially disposing of the technology and/or of the organizational knowledge required to set up the business. Secondly, that companies' procedures difficult to duplicate can constitute a beneficial form of competition policy in that they induce the firms to behave less collusively in the product market.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 31871.
Date of creation: Dec 1997
Date of revision:
Managers' Compensation; Oligopoly; Collusion; Outside Option;
Other versions of this item:
- MARINI, Marco, 1998. "Managers compensation and collusive behaviour under Cournot oligopoly," CORE Discussion Papers 1998002, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
- J00 - Labor and Demographic Economics - - General - - - General
- M51 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Firm Employment Decisions; Promotions
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
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