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Strategic Incentives (strategic + incentive)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting80%

Selected Abstracts

Incumbency and R&D Incentives: Licensing the Gale of Creative Destruction

JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 4 2000
Joshua S. Cans
This paper analyzes the relationship between incumbency and R&D incentives in the context of a model of technological competition in which technologically successful entrants are able to license their innovation to (or be acquired by) an incumbent. That such a sale should take place is natural, since postinnovation monopoly profits are greater than the sum of duopoly profits. We identify three key findings about how innovative activity is shaped by licensing. First, since an incumbent's threat to engage in imitative R&D during negotiations increases its bargaining power, there is a purely strategic incentive for incumbents to develop an R&D capability. Second, incumbents research more intensively than entrants as long as (and only if) their willingness to pay for the innovation exceeds that of the entrant, a condition that depends critically on the expected licensing fee. Third, when the expected licensing fee is sufficiently low, the incumbent considers entrant R&D a strategic substitute for in-house research. This prediction about the market for ideas stands in contrast to predictions of strategic complementarity in patent races where licensing is not allowed. [source]

POST-CARTEL PRICING DURING LITIGATION

THE JOURNAL OF INDUSTRIAL ECONOMICS, Issue 4 2004
Joseph E. Harrington Jr.
Standard methods in the U.S. for calculating antitrust damages in price-fixing cases are shown to create a strategic incentive for firms to price above the non-collusive price after the cartel has been dissolved. This results in an overestimate of the but for price and an underestimate of the level of damages. The extent of this upward bias in the but for price is greater, the longer the cartel was in place and the more concentrated the industry. [source]

Delegation and strategic incentives for managers in contests

MANAGERIAL AND DECISION ECONOMICS, Issue 8 2002
Matthias Kräkel
Owners usually want their managers to maximize profits. As the literature on strategic delegation has shown it may be beneficial to owners to put a positive weight on sales in the optimal linear incentive scheme for managers to make them behave more aggressively in the market. This paper shows that if the competition between the managers can be characterized as a contest, owners may induce their managers to maximize sales. Moreover, there is a first-mover advantage for owners when choosing their incentive schemes. If delegation is endogenous the type of contest will determine whether all owners delegate their decisions to managers or not. Copyright © 2002 John Wiley & Sons, Ltd. [source]

The Senate Electoral Cycle and Bicameral Appropriations Politics

AMERICAN JOURNAL OF POLITICAL SCIENCE, Issue 2 2009
Kenneth A. Shepsle
We consider the consequences of the Senate electoral cycle and bicameralism for distributive politics, introducing the concept of contested credit claiming, i.e., that members of a state's House and Senate delegations must share the credit for appropriations that originate in their chamber with delegation members in the other chamber. Using data that isolate appropriations of each chamber, we test a model of the strategic incentives contested credit claiming creates. Our empirical analysis indicates that the Senate electoral cycle induces a back-loading of benefits to the end of senatorial terms, but that the House blunts this tendency with countercyclical appropriations. Our analysis informs our understanding of appropriations earmarking and points a way forward in studying the larger consequences of bicameral legislatures. [source]

Capital Structure as a Strategic Variable: Evidence from Collective Bargaining

THE JOURNAL OF FINANCE, Issue 3 2010
DAVID A. MATSA
ABSTRACT I analyze the strategic use of debt financing to improve a firm's bargaining position with an important supplier,organized labor. Because maintaining high levels of corporate liquidity can encourage workers to raise their wage demands, a firm with external finance constraints has an incentive to use the cash flow demands of debt service to improve its bargaining position with workers. Using both firm-level collective bargaining coverage and state changes in labor laws to identify changes in union bargaining power, I show that strategic incentives from union bargaining appear to have a substantial impact on corporate financing decisions. [source]