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http://hdl.handle.net/10419/18279
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| Title: | | Managerial incentives, innovation and product market competition  |
| 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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