Managerial bonus systems in a differentiated duopoly: A comment

M.J.M. Jansen; A. van Lier; A. van Witteloostuijn

doi:10.1002/mde.1562

Managerial bonus systems in a differentiated duopoly: A comment

M.J.M. Jansen, A. van Lier, A. van Witteloostuijn

Quantitative Economics

Research output: Contribution to journal › Article › Academic › peer-review

Abstract

A differentiated cournot duopoly is considered where firm owners delegate the output decision to a manager, who is rewarded on the basis of his performance. If this performance is measured in terms of (i) pure profits, (ii) a combination of profits and sales, (iii) a combination of profits and market share or (iv) relative profits, the latter option strictly dominates the others if the products are perfect substitutes. Recently it was claimed that this result does not hold for all levels of product substitutability. In this comment, we show however that this result is robust against the introduction of product differentiation.

Original language	English
Pages (from-to)	61-70
Journal	Managerial and Decision Economics
Volume	33
Issue number	1
DOIs	https://doi.org/10.1002/mde.1562
Publication status	Published - 1 Jan 2012

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10.1002/mde.1562

Cite this

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