ORCID: https://orcid.org/0000-0002-5011-0828
(1997):
Managerial Incentives and Product Market Competition.
In: Review of Economic Studies, Vol. 64, No. 2: pp. 191-213
This is the latest version of this item.
Abstract
The paper shows that an increase in competition has two effects on managerial incentives: It increases the probability of liquidation, which has a positive effect on managerial effort, but it also reduces the firm’s profits, which may make it less attractive to induce high effort. Thus, the total effect is ambiguous. I identify natural circumstances where increasing competition unambiguously reduces managerial slack. In general, however, this relation need not be monotonic. A simple example demonstrates that-starting from a monopoly-managerial effort may increase as additional competitors enter the market, but will eventually decrease when competition becomes too intense.
Item Type: | Journal article |
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Faculties: | Economics Economics > Chairs > Seminar for Economic Theory |
Subjects: | 300 Social sciences > 330 Economics |
Language: | English |
Item ID: | 19772 |
Date Deposited: | 15. Apr 2014 08:53 |
Last Modified: | 04. Nov 2020 13:01 |
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Managerial Incentives and Product Market Competition. (deposited 15. Apr 2014 08:53)
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