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http://hdl.handle.net/10419/18279
  
Title:Managerial incentives, innovation and product market competition PDF Logo
Authors:Zhang, Zhentang
Issue Date:2002
Series/Report no.:DIW-Diskussionspapiere 295
Abstract:This paper investigates the strategic value of the managerial incentive scheme in affecting firms' incentive in R&D investment and their product market activities. Firstly, we find that in Cournot-quantity competition, owners strategically assign a non-profit-maximization objective to their managers. Consequently, managers in a delegation game invest more in cost-reducing R&D, and have higher output, lower prices and lower profits, as compared to profit-maximizers in an owner-run game. Secondly, we find that R&D collusion induces owners in a delegation game to choose more aggressive managerial incentives as compared to R&D competition, which in turn leads to increased R&D investment, reduced product prices and increased profits.
Subjects:Strategic Delegation
Managerial Incentives
R&D competition and R&D collusion
JEL:O32
L22
D20
C72
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des DIW
DIW-Diskussionspapiere

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