Summary
The principal owns a simple organization in which an agent supervises operatives. The agent chooses his/her own effort as well as the number of operatives to be hired. Operatives receive fixed wages and the agent a share of profits. In this model explicit solutions are given for the agent’s chosen effort and the agent’s optimal profit share. Increasing returns to scale lead to richer results than the constant returns to scale case.
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References
Beckmann, M.J. (1983): Tinbergen Lectures. Springer-Verlag. BerlinHeidelberg-New York
Siglitz, J.E. (1974): Risk Sharing and Incentives in Sharecropping, Review of Economic Studies 61, 219–256.
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© 1987 Springer-Verlag Berlin · Heidelberg
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Beckmann, M.J. (1987). Managers as Principals and Agents. In: Bamberg, G., Spremann, K. (eds) Agency Theory, Information, and Incentives. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-75060-1_19
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DOI: https://doi.org/10.1007/978-3-642-75060-1_19
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-51675-0
Online ISBN: 978-3-642-75060-1
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