Study of Managerial Producing Effort and Product Market Competition

The producing effort incentive model is designed based on incorporation's profit function and manager's effort cost. According to this model, an increasing market competition raises the incorporation closing probability and brings a positive effect on managerial producing effort. But such competition also reduces the firm's profits and generates a negative effect on the prompting of managerial effect. So it is important to match incentive contract with managerial producing effort according to market competence.