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2012-10-11Buch DOI: 10.18452/4430
Short-Term Managerial Contracts and Cartels
dc.contributor.authorHan, Martijn A.
dc.date.accessioned2017-06-16T00:44:26Z
dc.date.available2017-06-16T00:44:26Z
dc.date.created2012-11-16
dc.date.issued2012-10-11
dc.date.submitted2012-10-11
dc.identifier.issn1860-5664
dc.identifier.urihttp://edoc.hu-berlin.de/18452/5082
dc.description.abstractThis paper shows how a series of commonly observed short-term CEO employment contracts can improve cartel stability compared to a long-term employment contract. When a manager’s short-term appointment is renewed if and only if the firm hits a certain profit target, then (i) defection from collusion results in superior firm performance, thus reducing the chance of being fired, while (ii) future punishment results in inferior firm performance, thus increasing the chance of being fired in the future. The introduction of this re-employment tradeoff intertwines with the usual monetary tradeoff and can improve cartel stability. Studying the impact of fixed versus variable salary components, I find that fixed components can facilitate collusion with a short-term contract, while not affecting cartel stability with a long-term contract. Moreover, an extension of the model shows that short-term, renewable contracts can be a source of cyclical collusive pricing. Finally, interpreting the results in light of firm financing suggests that debt-financed firms can form more-stable cartels than equity-financed firms.eng
dc.language.isoeng
dc.publisherHumboldt-Universität zu Berlin, Wirtschaftswissenschaftliche Fakultät
dc.rights.urihttp://rightsstatements.org/vocab/InC/1.0/
dc.subjectcollusioneng
dc.subjectcartelseng
dc.subjectmanagerial contractseng
dc.subjectprice warseng
dc.subject.ddc330 Wirtschaft
dc.titleShort-Term Managerial Contracts and Cartels
dc.typebook
dc.identifier.urnurn:nbn:de:kobv:11-100205731
dc.identifier.doihttp://dx.doi.org/10.18452/4430
local.edoc.container-titleSonderforschungsbereich 649: Ökonomisches Risiko
local.edoc.pages36
local.edoc.type-nameBuch
local.edoc.container-typeseries
local.edoc.container-type-nameSchriftenreihe
local.edoc.container-volume2012
local.edoc.container-issue57
local.edoc.container-year2012
local.edoc.container-erstkatid2195055-6

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