We analyze the relationship between product market competition and managerial effort in a linear principal-agent model. Firms compete in a differentiated Cournot oliogopoly. We use two competition indexes: the degree of product differentiation and the number of firms. An increase in competition stemming from a lower degree of product differentiation reduces the optimal level of effort, while an increase in competition from more firms has an ambiguous effect.
Do Managers Work harder in Competitive Industries?
GRAZIANO, Clara;
1998-01-01
Abstract
We analyze the relationship between product market competition and managerial effort in a linear principal-agent model. Firms compete in a differentiated Cournot oliogopoly. We use two competition indexes: the degree of product differentiation and the number of firms. An increase in competition stemming from a lower degree of product differentiation reduces the optimal level of effort, while an increase in competition from more firms has an ambiguous effect.File in questo prodotto:
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