The main aim of this paper is to derive properties of an optimal compensation scheme for traditional consumer co-operatives in situations of strategic interaction with profit-maximizing firms. Our model sheds light on the common belief that Co-ops are less prone than PMFs to pay variable bonuses to their managers. We show that this occurs under price competition when in equilibrium Co-ops prefer to pay flat wages to their managers whereas their profit-maximizing rivals adopt variable, high-powered incentive schemes. The main rationale is that, due to consumers'preferences, a Co-op is per se highly expansionary in term of output and, therefore, does not need to provide strong strategic incentives to their managers who then may expand output too much.

Low-powered Strategic Incentives in Consumer Co-operatives under Mixed Oligopoly / M., Kopel; Marini, Marco. - ELETTRONICO. - 4(2012), pp. 1-16. - DEPARTMENT OF COMPUTER AND SYSTEM SCIENCES ANTONIO RUBERTI TECHNICAL REPORTS.

Low-powered Strategic Incentives in Consumer Co-operatives under Mixed Oligopoly

MARINI, MARCO
2012

Abstract

The main aim of this paper is to derive properties of an optimal compensation scheme for traditional consumer co-operatives in situations of strategic interaction with profit-maximizing firms. Our model sheds light on the common belief that Co-ops are less prone than PMFs to pay variable bonuses to their managers. We show that this occurs under price competition when in equilibrium Co-ops prefer to pay flat wages to their managers whereas their profit-maximizing rivals adopt variable, high-powered incentive schemes. The main rationale is that, due to consumers'preferences, a Co-op is per se highly expansionary in term of output and, therefore, does not need to provide strong strategic incentives to their managers who then may expand output too much.
2012
DIS
Mixed Oligopoly; Incentives
02 Pubblicazione su volume::02a Capitolo o Articolo
Low-powered Strategic Incentives in Consumer Co-operatives under Mixed Oligopoly / M., Kopel; Marini, Marco. - ELETTRONICO. - 4(2012), pp. 1-16. - DEPARTMENT OF COMPUTER AND SYSTEM SCIENCES ANTONIO RUBERTI TECHNICAL REPORTS.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/443447
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