Managers Compensation and Collusive Behaviour under Cournot Oligopoly
Marco Marini
MPRA Paper from University Library of Munich, Germany
Abstract:
The aim of the present paper is to show that the existence of a concrete outside option for firms' executives can induce, under specific circumstances, every firm to adopt restrictive output practises. In particular, the paper characterizes the conditions for which, under Cournot oligopoly, existing firms behave more collusively than in a standard Cournot model. It is also shown that room exists for perfect and stable collusive agreements amongst firms. Other interesting findings are also twofold. Firstly, that the equilibrium executives' pay will usually be dependant upon the number of companies initially disposing of the technology and/or of the organizational knowledge required to set up the business. Secondly, that companies' procedures difficult to duplicate can constitute a beneficial form of competition policy in that they induce the firms to behave less collusively in the product market.
Keywords: Managers' Compensation; Oligopoly; Collusion; Outside Option (search for similar items in EconPapers)
JEL-codes: J00 J30 J31 J62 L20 M51 (search for similar items in EconPapers)
Date: 1997-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)
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https://mpra.ub.uni-muenchen.de/31871/1/MPRA_paper_31871.pdf original version (application/pdf)
Related works:
Working Paper: Managers compensation and collusive behaviour under Cournot oligopoly (1998) 
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:31871
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