Bao, Renjie; De Loecker, Jan; Eeckhout, Jan - National Bureau of Economic Research - 2022
To answer the question whether managers are paid for market power, we propose a theory of executive compensation in an … economy where firms have market power, and the market for man- agers is competitive. We identify two distinct channels that … contribute to manager pay in the model: market power and firm size. Both increase the profitability of the firm, which makes …