Managers compensation and collusive behaviour under Cournot oligopoly
The aim of the present paper is to show that the existence of a concrete outside option for ï¬rmsâ€™ executives can induce, under speciï¬c circumstances, every ï¬rm to adopt restrictive output practises. In particular, the paper characterizes the conditions for which, under Cournot oligopoly, existing ï¬rms behave more collusively than in a standard Cournot model. It is also shown that room exists for perfect and stable collusive agreements amongst ï¬rms. Other interesting ï¬ndings are also twofold. Firstly, that the equilibrium executivesâ€™ pay will usually be dependent upon the number of companies initially disposing of the technology and/or of the organizational knowledge required to set up the business. Secondly, that companiesâ€™ procedures difficult to duplicate can constitute a beneï¬cial form of competition policy in that they induce the ï¬rms to behave less collusively in the product market
|Date of creation:||01 Jan 1998|
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