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Review of Industrial Organization

, Volume 8, Issue 4, pp 503–508 | Cite as

Indifference to profit-sharing is consistent

  • Sherrill Shaffer
Article

Abstract

The incentive for a firm unilaterally to switch from a conventional wage to profit-sharing is analyzed for a duopoly as a function of the degree of market power. The point of indifference is shown to be the consistent-conjectures mode of conduct; more competitive firms will not switch while less competitive firms will switch. A proportional tax on corporate profits will not alter the incentive of a firm to adopt or reject profit-sharing.

Key words

Profit-sharing incentives duopoly consistency tax 

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Copyright information

© Kluwer Academic Publishers 1993

Authors and Affiliations

  • Sherrill Shaffer
    • 1
  1. 1.Federal Reserve Bank of PhiladelphiaPhiladelphiaUSA

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