Sales maximization and specific human capital

Profit-maximizing owners of firms may find it optimal to provide managers w ith incentives to maximize sales in addition to profits. This influences th e outcome of the bargaining game between workers and managers over workers' wages and helps to solve the problem of underinvestment by workers in spec ific human capital. I investigate optimal managerial contracts from this po int of view and show that the optimal contract is a function of scales in a ddition to profits.