Product Market Competition and Agency Costs
AbstractWe model the effects of product market competition on agency costs, and develop two main empirical predictions. First, competition, by reducing agency costs, unambiguously increases the importance firms place on quality improvements. This leads to higher powered incentives, and in turn to increased effort and quality. Second, these effects are increasing in the severity of agency problems, and should be stronger in large, hierarchical corporations (where agency problems are more severe) than in entrepreneurial firms. We test the predictions of our model using a unique dataset with both firm and employee characteristics.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 2006287e.
Date of creation: 04 Dec 2006
Date of revision:
Employment and unemployment; Hours of work and work arrangements; Labour; Wages; salaries and other earnings;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-14 (All new papers)
- NEP-BEC-2007-01-14 (Business Economics)
- NEP-COM-2007-01-14 (Industrial Competition)
Please 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.:
- Jean-Etienne de Bettignies, 2004. "Product Market Competition and the Boundaries of the firm," Econometric Society 2004 North American Winter Meetings 248, Econometric Society.
- Haskel, Jonathan, 1991. "Imperfect Competition, Work Practices and Productivity Growth," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 53(3), pages 265-79, August.
- Vicente CuÃ±at & Maria Guadalupe, 2005.
"How Does Product Market Competition Shape Incentive Contracts?,"
Journal of the European Economic Association, MIT Press,
MIT Press, vol. 3(5), pages 1058-1082, 09.
- Vicente Cuñat & María Guadalupe, 2005. "How Does Product Market Competition Shape Incentive Contracts?," CEP Discussion Papers dp0687, Centre for Economic Performance, LSE.
- Vicente Cuñat & Maria Guadalupe, 2005. "How does product market competition shape incentive contracts?," LSE Research Online Documents on Economics 19894, London School of Economics and Political Science, LSE Library.
- Rachel Griffith, 2001. "Product market competition, efficiency and agency costs: an empirical analysis," IFS Working Papers, Institute for Fiscal Studies W01/12, Institute for Fiscal Studies.
- Schmidt, Klaus M, 1997.
"Managerial Incentives and Product Market Competition,"
Review of Economic Studies, Wiley Blackwell,
Wiley Blackwell, vol. 64(2), pages 191-213, April.
- Schmidt, Klaus M., 1996. "Managerial Incentives and Product Market Competition," CEPR Discussion Papers 1382, C.E.P.R. Discussion Papers.
- Caves, Richard E, 1980. "Industrial Organization, Corporate Strategy and Structure," Journal of Economic Literature, American Economic Association, vol. 18(1), pages 64-92, March.
- Chad Syverson, 2004.
"Market Structure and Productivity: A Concrete Example,"
NBER Working Papers
10501, National Bureau of Economic Research, Inc.
- Chad Syverson, 2004. "Market Structure and Productivity: A Concrete Example," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 112(6), pages 1181-1222, December.
- Chad Syverson, 2001. "Market Structure and Productivity: A Concrete Example," Working Papers 01-06, Center for Economic Studies, U.S. Census Bureau.
- Michael Raith, 2003. "Competition, Risk, and Managerial Incentives," American Economic Review, American Economic Association, vol. 93(4), pages 1425-1436, September.
- Nickell, Stephen J, 1996.
"Competition and Corporate Performance,"
Journal of Political Economy, University of Chicago Press,
University of Chicago Press, vol. 104(4), pages 724-46, August.
- Schmidt, Klaus M., 1997. "Managerial Incentives and Product Market Competition," Munich Reprints in Economics, University of Munich, Department of Economics 19772, University of Munich, Department of Economics.
- Green, Alison & Mayes, David, 1991. "Technical Inefficiency in Manufacturing Industries," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 101(406), pages 523-38, May.
- Lacetera, Nicola & Zirulia, Lorenzo, 2012.
"Individual preferences, organization, and competition in a model of R&D incentive provision,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 84(2), pages 550-570.
- Nicola Lacetera & Lorenzo Zirulia, 2011. "Individual Preferences, Organization, and Competition in a Model of R&D Incentive Provision," NBER Working Papers 17031, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Brown).
If references are entirely missing, you can add them using this form.