Double managerial delegation contracts with relative profit performance and environmental performance incentives under emission taxes
This paper examines the strategic relations between emission taxes and firms' managerial delegation contracts, which include incentives based on relative profit performance (RPP) and environmental performance (EP). We demonstrate that under quantity (price) competition, the government imposes h...
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| Veröffentlicht in: | Managerial and decision economics 2024-10, Vol.45 (7), p.4404-4414 |
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| container_title | Managerial and decision economics |
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| creator | Xu, Lili Yin, Yuntong Lee, Sang‐Ho |
| description | This paper examines the strategic relations between emission taxes and firms' managerial delegation contracts, which include incentives based on relative profit performance (RPP) and environmental performance (EP). We demonstrate that under quantity (price) competition, the government imposes higher (lower) emission taxes, while the firm owner sets lower (higher) EP incentives and negative (positive) RPP incentives, which leads to lower (higher) welfare. We also explore an endogenous competition mode game and find that quantity (price) competition emerges when both consumers' green willingness‐to‐pay (WTP) and product differentiation are low (high). Our findings suggest that public education on greenness is crucial for enhancing EP incentives in the design of managerial delegation contracts, while intense product market competition may be detrimental to consumers and society, especially when consumers' green WTP is low. |
| doi_str_mv | 10.1002/mde.4275 |
| format | Article |
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We demonstrate that under quantity (price) competition, the government imposes higher (lower) emission taxes, while the firm owner sets lower (higher) EP incentives and negative (positive) RPP incentives, which leads to lower (higher) welfare. We also explore an endogenous competition mode game and find that quantity (price) competition emerges when both consumers' green willingness‐to‐pay (WTP) and product differentiation are low (high). 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| subjects | Competition Consumers Contracts Delegation Differentiation Emissions Endogenous Environmental performance Incentives Product differentiation Profits Taxation Taxes Welfare Willingness to pay |
| title | Double managerial delegation contracts with relative profit performance and environmental performance incentives under emission taxes |
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