Weight assigned to a rival's profit by an advantaged firm in relative performance evaluation with Cournot–Bertrand competition

Jumpei Hamamura

Managerial and Decision Economics, 2022, vol. 43, issue 7, 2838-2844

Abstract: This study examines the weight placed on a rival's profit under asymmetric cost and Cournot–Bertrand competition. From our model analysis, when an advantaged firm decides quantity and a disadvantaged firm decides a price, we find the case where each firm set positive weight placed on a rival's profit. Our result suggests that decision variables in a product market are important to consider CEOs' implicit compensation contract in empirical research. In addition, it is interesting to demonstrate the advantaged firm sets positive weight placed on a rival's profit under quantity decision.

Date: 2022
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https://doi.org/10.1002/mde.3565

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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:43:y:2022:i:7:p:2838-2844

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