Executive compensation in oligopolies: Sales, profits and pay

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Advances in Applied Microeconomics

ISSN: 0278-0984
Series editor(s): Professor Michael Baye, Professor John Maxwell

Subject Area: Economics

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Document Information:
Title:	Executive compensation in oligopolies: Sales, profits and pay
Author(s):	Marc C. Chopin
Volume:	8 ISBN: 978-0-76230-576-6 eISBN: 978-1-84950-037-1
Citation:	Marc C. Chopin (2000), Executive compensation in oligopolies: Sales, profits and pay, in (ed.) 8 (Advances in Applied Microeconomics, Volume 8), Emerald Group Publishing Limited, pp.101-122
DOI:	10.1016/S0278-0984(99)08005-0 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Article type:	Full length article
Abstract:	This chapter analyzes the owner-manager contracting problem for firms competing in imperfectly competitive markets. The strategic interdependence of firms results in optimal incentive contracts that either compensate or penalize managers for sales. The predictions of the model are tested empirically and estimates of contract coefficients are reported. The results fail to confirm the predictions of the theoretical model; however, the coefficient estimates suggest that while the effects of profits and sales on compensation vary significantly across firms and industries, managers of most firms are rewarded for increases in firm profits.