Competition and the Strategic Choice of Managerial Incentives
Author | : Alessandra Chirco |
Publisher | : |
Total Pages | : 0 |
Release | : 2011 |
ISBN-10 | : OCLC:1376305468 |
ISBN-13 | : |
Rating | : 4/5 ( Downloads) |
Download or read book Competition and the Strategic Choice of Managerial Incentives written by Alessandra Chirco and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate how market competition affects the incentive to adopt a non-profit-maximizing behaviour. The analysis is developed in a strategic delegation framework in which owners delegate output decisions to managers interested in firm's relative performance. We study how the optimal delegation scheme is affected by market concentration and the elasticity of market demand. We prove that the distortion from a profit-maximizing rule decreases as market becomes less concentrated, while it increases as demand becomes more elastic. Finally, we discuss the impact of market competitiveness on the welfare-enhancing ability of delegation contracts.