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Job assignment, market power and managerial incentives

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  • Dam, Kaniska

Abstract

I study how product market conditions determine labor market outcomes in an economy where a continuum of heterogeneous firms compete for heterogeneous managers. The main objective of the paper is to establish how market power and managerial talent influence the incentive contracts. If firms with higher (lower) market power benefit more from managerial actions, then managerial talent has greater effects in such firms, and hence more talented managers are lured into firms with higher (lower) market power following a positively (negatively) assortative matching pattern. The equilibrium relationship between market power and managerial incentives is monotone if and only if the equilibrium matching is monotone.

Suggested Citation

  • Dam, Kaniska, 2015. "Job assignment, market power and managerial incentives," The Quarterly Review of Economics and Finance, Elsevier, vol. 57(C), pages 222-233.
    • Handle: RePEc:eee:quaeco:v:57:y:2015:i:c:p:222-233
    DOI: 10.1016/j.qref.2014.11.001
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    References listed on IDEAS

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    3. Rayenda Khresna Brahmana & Hui San Loh & Maria Kontesa, 2020. "Market Competition, Managerial Incentives and Agency Cost," Global Business Review, International Management Institute, vol. 21(4), pages 937-955, August.

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    More about this item

    Keywords

    Firm–manager assignment; Market power; Managerial incentives;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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