Sales Maximization and Specific Human Capital

Rand Journal of Economics, Vol. 29, No. 4, Winter 1998

Posted: 10 Dec 1998

See all articles by Jan Zabojnik

Jan Zabojnik

Queen's University - Department of Economics

Abstract

Profit-maximizing owners of firms may find it optimal to provide managers with incentives to maximize sales in addition to profits. This influences the outcome of the bargaining game between workers and managers over workers' wages and helps to solve the problem of underinvestment by workers in specific human capital. I investigate optimal managerial contracts from this point of view and show that the optimal contract is a function of sales in addition to profits.

Suggested Citation

Zabojnik, Jan, Sales Maximization and Specific Human Capital. Rand Journal of Economics, Vol. 29, No. 4, Winter 1998. Available at SSRN: https://ssrn.com/abstract=109889

Jan Zabojnik (Contact Author)

Queen's University - Department of Economics ( email )

94 University Avenue
Kingston, Ontario K7L 3N6
Canada
613-533-2275 (Phone)
613-533-6668 (Fax)

HOME PAGE: http://qed.econ.queensu.ca/faculty/zabojnik/Page/

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