Fanti, Luciano; Meccheri, Nicola - In: Journal of Institutional and Theoretical Economics (JITE) 168 (2012) 2, pp. 290-310
This paper compares two alternative incentive schemes, performance-related pay (PRP) and relative performance evaluation (RPE), in a differentiated duopoly where institutional features constrain firms to pay workers a given salary. It is shown that RPE endogenously arises as the optimal choice...