Skip to main content
Article thumbnail
Location of Repository

COMPETITION AND THE STRATEGIC CHOICE OF\ud MANAGERIAL INCENTIVES: THE RELATIVE\ud PERFORMANCE CASE

By A. Chirco, M. Scrimitore and C. Colombo

Abstract

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\ud 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

Topics: Strategic delegation, relative performance, oligopoly, constant elasticity demand
Year: 2011
DOI identifier: 10.1111/j.1467-999X.2011.04124.x
OAI identifier: oai:iris.unife.it:11392/1444910
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://hdl.handle.net/11392/14... (external link)
  • Suggested articles


    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.