Managerial Incentives in Duopoly
Indira Gandhi Institute of Development Research
This paper shows that in a model of managerial delegation in duopoly market structure, if the managers' salary varies with the incentive schemes offered by the owners, then the well-known results of equilibrium incentive scheme (by Fershtman and Judd, 1987, A.E.R.) get modified. In case of quantity competition the incentive scheme offered by the owners depend on the proportion of the incentive scheme that the managers get as a part of their salary, i.e. in equilibrium owners will not necessarily deviate from profit maximization to sales maximization, where as under price competition, demand and cost parameters plays crucial role to determine the equilibrium incentive structure.
Number of Pages in PDF File: 12
Keywords: competition, incentive, manager, duopoly and strategy
JEL Classification: L13, D43, L21, M40, M46working papers series
Date posted: August 13, 2003
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