Managerial Incentives and Durable Goods Monopoly

Gregory Goering

International Journal of the Economics of Business, 1994, vol. 1, issue 2, 271-282

Abstract: In many cases durable goods monopolists who sell out output do not appear to act in the competitive fashion suggested by Coase (1972). This indicates the firm's owners mitigate their commitment problem with buyers in some manner. This paper shows that managerial incentives provide a natural mechanism for the owner to mitigate its commitment problem without explicitly contracting with buyers. Owners will optimally shift their managers from the singular goal of profit maximization by penalizing them for sales. Additionally, the paper demonstrates that the degree to which managerial incentives and compensation diverge from pure profit maximization is in large part a function of the durability or quality of the product.

Keywords: Managerial incentives; Durable goods, JEL Clasification L12,L15,L21, (search for similar items in EconPapers)
Date: 1994
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.tandfonline.com/10.1080/758516799 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:ijecbs:v:1:y:1994:i:2:p:271-282

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CIJB20

DOI: 10.1080/758516799

Access Statistics for this article

International Journal of the Economics of Business is currently edited by Eleanor Morgan

More articles in International Journal of the Economics of Business from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().