Managerial Effort Incentives and Market Collusion管理努力的激励与市场合谋.pptVIP

* * * Personal liability is unambiguously good for deterrence as it reduces the profitability of collusion. Under asymmetric information on K, the manager may want to deviate and report to the antitrust authority if individual leniency, to get the compensation u + no risk. Then need to give an information rent (w psi(e*)+u) to ensure that the manager prefers continuing collusion. This further reduces the profitability of collusion. If there is a LP, it complements individual liability: when D, use the LP so as not to have to pay rho J to the manager. * * * * * * * The effects we have highlighted impact profitability more than sustainability. * Reputation issues are likely to also reduce the impact of WP if there is collusion. But denouncing collusion can be justified if one is not the instigator, and other shareholders may perceive it as a signal of honesty (???). High rewards have the drawback of blurring this signal (as blood donations, etc.) * * If impact of e increases with quantities, deviation and competition are more attractive as both entail larger quantities. Hence strong effort incentives make deviation or competition more attractive to the manager as he will then capture more of the gain of his effort. Managerial Effort Incentives and Market Collusion Cécile Aubert University of Bordeaux (GREThA) and Toulouse School of Economics (LERNA) CLEEN Workshop – June 13, 2008 Main idea The objectives of owners and those of decision-makers within a firm may not be aligned. Obtaining high profits without “misbehaving” (e.g., colluding) requires more effort from managers (and high executives) – which is costly. When effort is private information, managers may substitute effort and collusive behavior. Does this faciliate collusion? Can it be prevented by “honnest” shareholders? What impact for antitrust enforcement? Introduction – Model – Benchmarks – Managers – Antitrust – Conclusion Internal conflicts of interests Fraud is widespread even at top level (cf. Pric