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Aditi Sengupta
''Product Differentiation and Relative Performance Evaluation in an Asymmetric Duopoly.''
( 2016, Vol. 36 No.2 )
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.
Keywords: Strategic Delegation, Relative Performance, Managerial Compensation, Oligopoly.
JEL: L2 - Firm Objectives, Organization, and Behavior: General
L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : Jan 28 2016 Manuscript Accepted : Apr 14 2016

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