Should Owners of Firms Delegate Long-run Decisions?

Juan Carlos Bárcena Ruiz and Francisco Javier Casado Izaga
Authors registered in the RePEc Author Service: F. Javier Casado-Izaga and Juan Carlos Bárcena-Ruiz

No 1134-8984, BILTOKI from Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística)

Abstract: This paper analyzes whether owners of firms have incentives to delegate their long-run decisions to managers or not. The result arising from our analysis shows that owners do have incentives to keep their long-run decisions (the location of the firm) to themselves. In this context we show that the delegation of short-run decisions (prices) to the managers leads to an increase in the degree of product differentiation with regard to the case in which firms do not hire managers.

Keywords: managerial incentives; strategic delegation; product differentiation (search for similar items in EconPapers)
Date: 1999-11
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Citations: View citations in EconPapers (1)

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