Equilibrium Incentives in Oligopoly
The authors examine the incentives which competing principals give their agents, focusing on two oligopoly models where owners write incentive contracts with the ir managers. Under Cournot quantity competition, each manager's margi nal payment for production will exceed the firm's marginal profit. De viations from profit maximization are reduced by ex ante uncertainty about costs and increased by ex ante correlation between the firms' c osts. In contrast, in a differentiated goods market with price compet ition, managers receive less than their marginal profit. In general, a principal will distort his agent's incentives when the agent compet es with agents of competing principals. Copyright 1987 by American Economic Association.
(This abstract was borrowed from another version of this item.)
|Date of creation:||Dec 1984|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.kellogg.northwestern.edu/research/math/Email:
More information through EDIRC
|Order Information:|| Email: |
When requesting a correction, please mention this item's handle: RePEc:nwu:cmsems:642. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fran Walker)
If references are entirely missing, you can add them using this form.