Market competition and lower tier incentives

Arbeitspapier

The relationship between competition and performance-related pay has been analyzed in single-principal-single-agent models. While this approach yields good predictions for managerial pay schemes, the predictions fail to apply for employees at lower tiers of a firm's hierarchy. In this paper, a principal-multi-agent model of incentive pay is developed which makes it possible to analyze the effect of changes in the competitiveness of markets on lower tier incentive payment schemes. The results explain why the payment schemes of agents located at low and mid tiers are less sensitive to changes in competition when aggregated firm data is used.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2453

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Labor Force and Employment, Size, and Structure ; Oligopoly and Other Imperfect Markets ; Firm Organization and Market Structure
• Subject: Cournot competition ; contract delegation ; moral hazard ; entry ; market size ; wage cost ; Leistungsorientierte Vergütung ; Mittleres Management ; Agency Theory ; Wettbewerb ; Marktstruktur ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Theilen, Bernd
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/26498
• Last update: 10.03.2025, 11:43 AM CET