Market Incentives and Work Incentives: The Question of Flexible Production

Robert Drago and Geoffrey K Turnbull

International Economic Review, 1991, vol. 32, issue 1, 77-83

Abstract: The authors analyze the effects of demand elasticities on production where competitive firms confront common productivity variations. Firms with single worker-owners respond optimally to demand and productivity conditions. For principal-agent firms, Simon's employment relation is optimal, while tournaments, piece rates, quotas, and profit-sharing schemes are not. Copyright 1991 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1991
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