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Competition for Managers and Product Market Efficiency
Author(s) -
Barros Fátima,
MachoStadler Inés
Publication year - 1998
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1430-9134.1998.00089.x
Subject(s) - competition (biology) , business , product market , industrial organization , information asymmetry , market competition , product (mathematics) , microeconomics , economics , market economy , finance , incentive , ecology , geometry , mathematics , biology
We investigate whether competition between two firms to hire managers with different abilities might affect efficiency in the product market, when a manager's effort is his/her private information. We conclude that competition for managers might lead to an improvement in efficiency in the market of the firm that attracts the most efficient manager. Competition for managers might even eliminate the productive efficiency loss due to the asymmetry of information in the firm‐manager relationship.