Chirco, Alessandra and Colombo, Caterina and Scrimitore, Marcella (2009): Competition and the Strategic Choice of Managerial Incentives: the Relative Performance Case.
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In this paper we study the role of market competitiveness in a strategic delegation game in which owners delegate output decisions to managers interested in the firm's relative performance. In particular we study how the optimal delegation scheme - i.e. the distortion from pure profit maximization - is affected by market concentration and the elasticity of market demand. We show that these two indexes of market competitiveness do not alter managerial incentives in the same way: while the optimal degree of delegation decreases as the market becomes less concentrated, it increases as demand becomes more elastic.
|Item Type:||MPRA Paper|
|Original Title:||Competition and the Strategic Choice of Managerial Incentives: the Relative Performance Case|
|Keywords:||Strategic delegation, relative performance, oligopoly, isoelastic demand|
|Subjects:||L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L21 - Business Objectives of the Firm
D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection
|Depositing User:||Marcella Scrimitore|
|Date Deposited:||25. Dec 2009 08:15|
|Last Modified:||14. Feb 2013 08:32|
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