Endogenous Timing and Strategic Managerial Incentives in a Duopoly Game
Author | : Michael Kopel |
Publisher | : |
Total Pages | : 16 |
Release | : 2008 |
ISBN-10 | : OCLC:1290310914 |
ISBN-13 | : |
Rating | : 4/5 ( Downloads) |
Download or read book Endogenous Timing and Strategic Managerial Incentives in a Duopoly Game written by Michael Kopel and published by . This book was released on 2008 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we study the nature of incentive contracts and organizational modes in a game where the firms' owners endogenously determine the order of moves at the quantity-setting stage, can choose to delegate the production decision to a manager and write appropriate incentive contracts. It is shown that in our quantity-setting model Stackelberg-type outcomes can occur. In these outcomes the Stackelberg leader is owner-managed and the follower delegates the quantity choice to a manager, who is compensated based on profits and sales. Furthermore, the follower has a second-mover advantage, i.e. achieves a higher profit than the leader.