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Weight assigned to a rival's profit by an advantaged firm in relative performance evaluation with Cournot–Bertrand competition

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  • Jumpei Hamamura

Abstract

This study examines the weight placed on a rival's profit under asymmetric cost and Cournot–Bertrand competition. From our model analysis, when an advantaged firm decides quantity and a disadvantaged firm decides a price, we find the case where each firm set positive weight placed on a rival's profit. Our result suggests that decision variables in a product market are important to consider CEOs' implicit compensation contract in empirical research. In addition, it is interesting to demonstrate the advantaged firm sets positive weight placed on a rival's profit under quantity decision.

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  • Jumpei Hamamura, 2022. "Weight assigned to a rival's profit by an advantaged firm in relative performance evaluation with Cournot–Bertrand competition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2838-2844, October.
    • Handle: RePEc:wly:mgtdec:v:43:y:2022:i:7:p:2838-2844
    DOI: 10.1002/mde.3565
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