An Optimal Commission Plan for Salesmen's Control Over Price

Charles B. Weinberg
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Charles B. Weinberg: Stanford University

Management Science, 1975, vol. 21, issue 8, 937-943

Abstract: If marginal costs are constant, salesman who are paid a commission based on gross margin and who are given control over price will set prices so as to maximize simultaneously their own income and the company's profits. The result holds even if a salesman can only make a probabilistic estimate of sales.

Date: 1975
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