Competition and the Strategic Choice of Managerial Incentives: the Relative Performance Case

Alessandra Chirco (), Caterina Colombo () and Marcella Scrimitore

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we study the role of market competitiveness in a strategic delegation game in which owners delegate output decisions to managers interested in the firm's relative performance. In particular we study how the optimal delegation scheme - i.e. the distortion from pure profit maximization - is affected by market concentration and the elasticity of market demand. We show that these two indexes of market competitiveness do not alter managerial incentives in the same way: while the optimal degree of delegation decreases as the market becomes less concentrated, it increases as demand becomes more elastic.

Keywords: Strategic delegation; relative performance; oligopoly; isoelastic demand (search for similar items in EconPapers)
JEL-codes: D43 L13 L21 (search for similar items in EconPapers)
Date: 2009-12
New Economics Papers: this item is included in nep-bec, nep-com and nep-cse
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/19540/1/MPRA_paper_19540.pdf original version (application/pdf)

Related works:
Journal Article: COMPETITION AND THE STRATEGIC CHOICE OF MANAGERIAL INCENTIVES: THE RELATIVE PERFORMANCE CASE (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:19540

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().