TY - UNPB
T1 - Competition Reduces X-Inefficiency
T2 - A Note on a Limited Liability Mechanism
AU - Stennek, M.J.
PY - 1995
Y1 - 1995
N2 - The study illustrates that a financial restriction may serve as a disciplining device on the internal efficiency of a firm, and that the disciplining power is higher the tougher the product market competition is. The financial restriction is modeled as a limited liability constraint, that is a non-negative profit constraint. Hence, this limited liability mechanism may, in part, account for the disciplining power of product market competition on firm efficiency, alleged by policy makers as well as economists.
AB - The study illustrates that a financial restriction may serve as a disciplining device on the internal efficiency of a firm, and that the disciplining power is higher the tougher the product market competition is. The financial restriction is modeled as a limited liability constraint, that is a non-negative profit constraint. Hence, this limited liability mechanism may, in part, account for the disciplining power of product market competition on firm efficiency, alleged by policy makers as well as economists.
M3 - Discussion paper
VL - 1995-56
T3 - CentER Discussion Paper
BT - Competition Reduces X-Inefficiency
PB - CentER
ER -