IDEAS home Printed from https://ideas.repec.org/a/mhr/jinste/urndoi10.1628-jite-2023-0027.html
   My bibliography  Save this article

The Tragedy of the Common Holdings: Coordinated Manager Compensation and Price Competition

Author

Listed:
  • Werner Neus
  • Manfred Stadler

Abstract

We study price competition in a heterogeneous triopoly market where two firms are commonly owned by the same institutional shareholders, whereas the third firm is owned by independent shareholders.With such a mixed ownership structure the common owners have an incentive to coordinate their firms' behavior. In contrast to direct coordination of price decisions, delegation to managers enables indirect coordination via the designs of the manager compensation contracts. Compared to direct owner collusion, this more sophisticated type of indirect coordination leads to even higher firm profits and to an even higher loss of social welfare: the tragedy of common holdings.

Suggested Citation

  • Werner Neus & Manfred Stadler, 2023. "The Tragedy of the Common Holdings: Coordinated Manager Compensation and Price Competition," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 179(2), pages 271-287.
    • Handle: RePEc:mhr:jinste:urn:doi:10.1628/jite-2023-0027
    DOI: 10.1628/jite-2023-0027
    as

    Download full text from publisher

    File URL: https://www.mohrsiebeck.com/en/article/the-tragedy-of-the-common-holdings-coordinated-manager-compensation-and-price-competition-101628jite-2023-0027
    Download Restriction: Fulltext access is included for subscribers to the printed version.
    File URL: https://libkey.io/10.1628/jite-2023-0027?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    price competition; manager compensation; common holdings; shareholder coordination;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mhr:jinste:urn:doi:10.1628/jite-2023-0027. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Thomas Wolpert (email available below). General contact details of provider: https://www.mohrsiebeck.com/jite .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.