摘要: We study an agency model with a novel combination of features - agents (CEOs) differ in their ability, firms choose both the scope of the CEO's activities and their incentives, and there is free entry by firms. The outcome is an i... 展开 We study an agency model with a novel combination of features - agents (CEOs) differ in their ability, firms choose both the scope of the CEO's activities and their incentives, and there is free entry by firms. The outcome is an industry equilibrium in which firms are heterogenous in scope and output. That is, firms hiring more able CEOs complement higher ability with greater scope and stronger incentives, resulting in greater output. Pay has a strong "superstars" element in the sense that motivating higher ability CEOs to accept a job involving more effort and greater risk of managing greater scope, requires much greater rewards. The model is a simple one that makes strong assumptions; this allows us to analyze it very completely and arrive at sharp conclusions. For example, we find that an increase in demand for the industry's product, e.g., a booming economy or opening of foreign economies, increases both the overall level and skewness of the cross section distribution of CEO compensation. The model suggests a variety of other empirical predictions. Some preliminary empirical work suggests the model may prove quite useful for un- derstanding some interesting trends in compensation. For example, our model provides an explanation for the recent increased level and dispersion in CEO compensation that is rooted in product market competition and rational board reaction to changes in the firm's environment. 收起