Non-Intrinsic Common Agency

Abstract:     
In this paper we analyse a common agency model in which agents can choose with how many principals they want to work for, while principals cannot condition contracts on the agent's decision to accept other contracts. In this case of "non-intrinsic" common agency we characterise the equilibrium. Unless the substitutability between the two outputs is very strong, optimality conditions for principals' contracts are the same as with intrinsic common agency. However, principals suffer from reciprocal competition, which with "moderate" substitutability increases the informational rent agents obtain in equilibrium.

JEL Classifications: L14, L41, D82

Working Paper Series