We introduce a theoretical model of the active fund management industry (AFMI) in which performance and size depend on the AFMI's competitiveness (concentration). Under plausible assumptions, as AFMI's concentration decreases, so do fund managers' incentives for exerting effort in search of...

We introduce an international active fund management model in which competing managers have heterogeneous incentives (effort productivities, costs) for searching domestic/foreign investment opportunities. In equilibrium, the domestic/foreign incentives heterogeneity gives rise to a novel...