Job Matching, Competition and Managerial Incentives

Kaniska Dam ()
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Kaniska Dam: Division of Economics, CIDE

No DTE 460, Working Papers from CIDE, División de Economía

Abstract: When a manager's principal task is to organize production more efficiently, the intensity of the product market competition is crucial in determining the nature of firm-manager matching as well as the structure of managerial incentive. The firm-manager market is modeled as a two-sided matching game. If greater competition leads to increasing (decreasing) returns to cost-reduction, then a firm that faces more intense competition employs a manager with higher (lower) wealth, offers higher (lower) bonus and compensation, and has lower (higher) managerial slack. We further analyze the effects of entry on equilibrium matching and executive compensation.

Keywords: Job Matching; Competition; Managerial Incentives (search for similar items in EconPapers)
JEL-codes: C78 J62 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2009-10
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