Monopsony Power, Pay Structure and Training

Although interest in monopsonistic influences on labor market outcomes has revived in recent years, only a few empirical studies provide direct evidence on this topic. In this article, the authors analyze the effect of monopsony power on pay structure, using a direct measure of labor market thinness. The authors find evidence of monopsony power, as firms facing fewer local competitors offer lower wages to skilled labor and trainees, but not to unskilled labor. The findings have important implications for the economic theory of training, as most recent models assume monopsonistic pay-setting for skilled labor, but not for trainees.

Say on Pay: ein Überblick über Gestaltungsoptionen, ökonomische Konsequenzen und Erkenntnisse aus Empirie und Laborexperimenten

Unter dem Stichwort Say on Pay (SoP) haben in den letzen Jahren die meisten Länder der EU und die USA den Aktionären Abstimmungsrechte im Zusammenhang mit der Vergütung des Top-Managements eingeräumt. Zwischen den einzelnen Ländern bestehen jedoch erhebliche Unterschiede hinsichtlich der konkreten Ausgestaltung des SoP. Dieser Beitrag diskutiert die Wirkungen unterschiedlicher Gestaltungsoptionen des SoP auf die Anreizgestaltung und den Nutzen des Managements und der Aktionäre im Rahmen eines einfachen linearen Agency Modells. Dabei erweisen sich das vorvertragliche bindende SoP und das bedingt verpflichtende, nachvertragliche bindende SoP gegenüber den anderen untersuchten Varianten als überlegen. Während das konsultative SoP an seiner mangelnden Durchsetzbarkeit leidet, bietet das nachvertragliche bindende SoP Anreize für opportunistisches Verhalten auf Seiten der Aktionäre und führt deshalb zu Wohlfahrtsverlusten. In Ergänzung der Modellanalyse wird ein Überblick über die wichtigsten empirischen und experimentellen Studien zum Thema SoP gegeben und deren Inhalt im Lichte der Modellergebnisse diskutiert. Most countries of the European Union as well as the US recently introduced shareholder votes on the remuneration of executives, also referred to as “Say on Pay” (SoP). Interestingly, legislators in different jurisdictions opted for quite dissimilar voting right regimes. We provide an overview of the main regulatory approaches and discuss the potential impact of variations in SoP design on the structure of compensation contracts and the utility of shareholders and executives. We find that pre-contractual SoP and conditional post-contractual SoP with binding consequences are in the best interest of shareholders. By contrast, advisory SoP typically suffers from lacking enforceability. We also find that post-contractual SoP with binding consequences results in efficiency losses because it fuels moral hazard on the part of shareholders. We complement the theoretical analysis with a discussion of recent empirical and experimental studies on Say on Pay.

Measuring Consumers' Willingness to Pay. Which Method fits best?

Gauging the maximum willingness to pay (WTP) of a product accurately is a critical success factor that determines not only market performance but also financial results. A number of approaches have therefore been developed to accurately estimate consumers’ willingness to pay. Here, four commonly used measurement approaches are compared using real purchase data as a benchmark. The relative strengths of each method are analyzed on the basis of statistical criteria and, more importantly, on their potential to predict managerially relevant criteria such as optimal price, quantity and profit. The results show a slight advantage of incentive-aligned approaches though the market settings need to be considered to choose the best-fitting procedure.