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Author:Spagnolo, G.
Title:Managerial incentives and collusive behavior
Journal:European Economic Review
2005 : AUG, VOL. 49:6, p. 1501-1523
Index terms:corporate governance
control
executives
compensation
earnings
cartels
oligopoly
models
Freeterms:collusion
Language:eng
Abstract:In this paper, the effects of empirically observed managerial incentives are characterized on long-run oligopolistic competition. When managers have a preference for smooth time-paths of profits, manager-led firms can sustain collusive agreements at lower discount factors. Capped bonus plans and incumbency rents with termination threats make collusion supportable at any discount factor, independent of contracts' duration.
SCIMA record nr: 259626
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