Strategic incentives for market share

Robert Ritz

No 248, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Market share objectives are prominent in many industries, especially where managers pay much attention to league table rankings. This paper explores the strategic rationale for giving managers incentives based on market share in an oligopoly competing in strategic substitutes. Moreover, the paper discusses evidence on executive compensation practice in the automotive and investment banking industries. As predicted by the theory, firms in both industries use explicit contractual incentives based on market share. The profitability squeeze in the US car industry due to aggressive buyer discount programs can thus be understood as a consequence of prevailing management incentives.

Keywords: Strategic Delegation; Market Share; Executive Compensation; League Tables (search for similar items in EconPapers)
JEL-codes: D21 D43 G24 J33 L62 (search for similar items in EconPapers)
Date: 2005-10-01
New Economics Papers: this item is included in nep-com, nep-fin and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: Strategic incentives for market share (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:oxf:wpaper:248

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