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- W2117141438 abstract "A large literature considers the impact of product market competition on the internal e¢ ciency of …rms–what Leibenstein (1966) called “X-E¢ ciency.”Formal models tend to produce ambiguous results which depend crucially on the strategy space in the product market. By utilizing monotone methods, we are able to take a substantially more general approach. We provide a necessary and su¢ cient condition for increased product market competition to cause an agent in a principal-agent setting to take a harder action. We do so without imposing any structure on the product market. We further show that it can be the case that product market competition causes a harder action but actually increases the welfare loss. This is because the …rst-best action can be more responsive to product market competition than the second-best action." @default.
- W2117141438 created "2016-06-24" @default.
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- W2117141438 date "2008-01-01" @default.
- W2117141438 modified "2023-09-24" @default.
- W2117141438 title "Does Competition Make Firms More E¢ cient?" @default.
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