Common holdings and strategic manager compensation: The case of an asymmetric triopoly

Werner Neus and Manfred Stadler

Managerial and Decision Economics, 2018, vol. 39, issue 7, 814-820

Abstract: We study an asymmetric triopoly in a heterogeneous product market where quantity decisions are delegated to managers. The two biggest firms are commonly owned by shareholders such as index funds, whereas the smallest firm is owned by independent shareholders. Under such a common holding owner structure, the owners have an incentive to coordinate when designing their manager compensation schemes. This coordination leads to a reallocation of production and induces a redistribution of profits. The trade volume in the market is reduced so that shareholder coordination is detrimental to consumer surplus as well as welfare.

Date: 2018
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https://doi.org/10.1002/mde.2964

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Working Paper: Common holdings and strategic manager compensation: The case of an asymmetric triopoly (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:39:y:2018:i:7:p:814-820

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