Product Differentiation and Relative Performance Evaluation in an Asymmetric Duopoly

In a model of managerial delegation in a duopoly with asymmetric costs, I show that an increase in the intensity of market competition (product differentiation) increases the absolute weight placed on rival's profit (relative performance) in the managerial compensation scheme for both firms and also increases market concentration. The relatively efficient (larger) firm always places higher weight on rival's performance and obtains higher market share.

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Year of publication:	2007-09
Authors:	Sengupta, Aditi
Institutions:	Southern Methodist University, Department of Economics
Subject:	Strategic Delegation \| Relative Performance \| Managerial Compensation \| Oligopoly

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Extent:	application/pdf
Series:	Departmental Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 0708 9 pages
Classification:	D43 - Oligopoly and Other Forms of Market Imperfection ; L13 - Oligopoly and Other Imperfect Markets ; M52 - Compensation and Compensation Methods and Their Effects (stock options, fringe benefits, incentives, family support programs) ; M21 - Business Economics
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005656591