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Why did the Dutch East India Co. outperform the British East India Co.? —A theoretical explanation based on the objective of the firm and limited liability—

Shinkai, Tetsuya; Ohkawa, Takao; Okamura, Makoto; … - School of Economics, Kwansei Gakuin University - 2012

We examine the relationship between the objective of a monopolist and limited liability. We establish that the owners of a monopolistic firm are better off to choose profit maximization rather than sales maximization under both unlimited and limited liability. This is consistent with the fact...

Persistent link: https://www.econbiz.de/10010596100

On welfare losses due to imperfect competition

Ritz, Robert - Faculty of Economics, University of Cambridge - 2013

Corporate managers and executive compensation in many industries place significant emphasis on measures of firm size, such as sales revenue or market share. Such objectives have an important yet thus far unquantified impact on market performance. With n symmetric firms, equilibrium welfare...

Persistent link: https://www.econbiz.de/10011015263

On welfare losses due to imperfect competition

Ritz, R.A. - Faculty of Economics, University of Cambridge - 2012

Corporate managers and executive compensation in many industries place significant emphasis on measures of firm size, such as sales revenue or market share. Such objectives have an important - yet thus far unquantifed - impact on market performance. With n symmetric firms, equilibrium welfare...

Persistent link: https://www.econbiz.de/10010699810

Shareholder-Value Maximization and Tacit Collusion

Spagnolo, Giancarlo - Economics Institute for Research (SIR), … - 1998

This paper shows that as long as the stock market has perfect foresight, some dividends are distributed, and incentives are paid more than once or are deferred, stock-related compensation packages are strong incentives for managers to support tacit collusive agreements in repeated oligopolies....

Persistent link: https://www.econbiz.de/10005649318

Ownership, Control, and Collusion

Spagnolo, Giancarlo - Economics Institute for Research (SIR), … - 1996

The paper addresses the effects of the separation of ownership and control on long-run competition in oligopolies. It finds that when managers have the preference for smooth time-paths of profits revealed by the evidence on "income smoothing," manager-led firms can sustain any collusive...

Persistent link: https://www.econbiz.de/10005649468

Debt as a (Credible) Collusive Device, or: "Everybody Happy but the Consumer"

Spagnolo, Giancarlo - Economics Institute for Research (SIR), … - 1998

The paper proposes a theory of the anti-competitive effects of debt finance based on the interaction between capital structure, managerial incentives, and firms' ability to sustain collusive agreements. It shows that shareholders' commitments that reduce conflicts with debtholders - such as...

Persistent link: https://www.econbiz.de/10005423775

Debt, Managers and Cartels

Piccolo, Salvatore; Spagnolo, Giancarlo - Centro Studi di Economia e Finanza (CSEF) - 2014

We propose a theory of anticompetitive effects of debt finance based on the interaction between capital structure, managerial incentives, and firms ability to sustain collusive agreements. Shareholders' commitments not to expropriate debtholders through managers with valuable reputations or...

Persistent link: https://www.econbiz.de/10010781432

Endogenous Determination of the Liability Rule in Oligopolistic Markets

Ohkawa, Takao; Shinkai, Tetsuya; Okamura, Makoto; … - School of Economics, Kwansei Gakuin University - 2012

We address the following question: Why do most large firms select limited liability as their business organizational form in the real world? We construct a two-stage game. In the first stage, each of the oligopolistic firms chooses its business organizational form, while in the second stage,...

Persistent link: https://www.econbiz.de/10010559511

Bilateral delegation in wage and employment bargaining in monopoly

Chatterjee, Ishita; Saha, Bibhas - In: Economics Letters 120 (2013) 2, pp. 280-283

We study efficiency and distributional implications of bilateral delegation in wage and employment bargaining in … monopoly. Delegation causes underproduction, and the bargaining pie severely contracts rendering mutual gains from delegation …

Persistent link: https://www.econbiz.de/10010678809

Bilateral Delegation, Wage Bargaining and Managerial Incentives: Implications for Efficiency and Distribution

Chatterjee, Ishita; Saha, Bibhas - School of Economics, University of East Anglia - 2011

We develop a model of bilateral delegation in wage and employment bargaining to study efficiency and distributional … implications in monopoly and in Cournot duopoly. In both markets delegation causes underproduction, but has contrasting … expands, sometimes even up to the collusive level suggesting that delegation is conducive to implicit collusion. Surprisingly …

Persistent link: https://www.econbiz.de/10009195406

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