Firm competition and incentive pay: Rent seeking at work

Mikael Priks

Economics Letters, 2011, vol. 113, issue 2, 154-156

Abstract: Empirical evidence shows that competition among firms generates steep incentives inside firms. Incentive pay stimulates productive investments but may generate inefficient rent-seeking investments. I show that competition reduces firms’ profits and thereby the inefficient investments, which makes steep incentives attractive.

Keywords: Payment methods; Competition; Rent seeking (search for similar items in EconPapers)
JEL-codes: J2 J3 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:113:y:2011:i:2:p:154-156

DOI: 10.1016/j.econlet.2011.06.006

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