Sie befinden Sich nicht im Netzwerk der Universität Paderborn. Der Zugriff auf elektronische Ressourcen ist gegebenenfalls nur via VPN oder Shibboleth (DFN-AAI) möglich. mehr Informationen...
Piece Rates vs. Contests in Product Market Competition
Ist Teil von
Jahrbuch für Wirtschaftswissenschaften, 2015-12, Vol.66 (3), p.273-287
Ort / Verlag
Berlin: De Gruyter
Erscheinungsjahr
2015
Link zum Volltext
Quelle
EBSCOhost Business Source Ultimate
Beschreibungen/Notizen
We study product market competition between firm owners (principals) where workers (agents) decide on their efforts and, hence, on output levels. Various worker compensation schemes are compared: a piece-rate compensation as a benchmark when workers’ output performance is verifiable, and different contest-based compensation schemes with fixed and variable prizes when it is only verifiable who the best performing worker is. Without rivalry between firms, all considered compensation schemes lead to the same outcome. In case of product market competition, however, a contest-based compensation scheme with revenue-dependent prizes leads to more employment, more production, and lower firm profits. The reason is that strategic interaction between the firm owners leads to an aggressive overinvestment in worker employment as well as in the revenue shares offered to the contest winners.