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Managerial Job Assignment and Imperfect Competition in Asymmetric Equilibrium

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  • Grossmann, Volker

    (University of Fribourg)

Abstract

This paper develops a model with multiple market locations in which the quality of intangible assets of firms, provided by management, determines the firms’ performance. Despite an ex ante symmetry of potential entrants, the equilibrium assignment of heterogeneous managerial skills to firms tends to be asymmetric. This sorting outcome determines both the goods market structure at single locations and the size distribution of firms. Results are consistent with a number of observed patterns regarding the size distribution of firms and establishments, and the relation of firm size to profitability, productivity, managerial skills and manager remuneration.

Suggested Citation

  • Grossmann, Volker, 2003. "Managerial Job Assignment and Imperfect Competition in Asymmetric Equilibrium," IZA Discussion Papers 738, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp738
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    Cited by:

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    3. Christian Bayer & Carsten Burhop, 2008. "A Corporate Governance Reform as a Natural Experiment for Incentive Contracts," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 60(4), pages 378-399, October.

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    More about this item

    Keywords

    asymmetric equilibrium; firm size; intangible assets; managerial job assignment;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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