Abstract

http://ssrn.com/abstract=287115
 
 

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Common Agency Equilibria with Discrete Mechanisms and Discrete Types


David Martimort


University of Toulouse 1 - Industrial Economic Institute (IDEI); CESifo (Center for Economic Studies and Ifo Institute)

Lars Stole


University of Chicago - Booth School of Business

October 2001

CESifo Working Paper Series No. 572

Abstract:     
This paper characterizes the equilibrium sets of an intrinsic common agency game with discrete types and direct revelation mechanisms. After presenting a general algorithm to find the pure-strategy equilibria of this game, we use it to characterize these equilibria when the two principals control activities which are complements in the agent's objective function. Some of those equilibria may entail allocative inefficiency. For the case of substitutes, we demonstrate non-existence of such equilibria with direct mechanisms, but existence may be obtained with indirect mechanisms. Finally, we relax the equilibrium concept and analyze quasi-equilibria. We show that existence is then guaranteed and characterize the corresponding allocations.

Number of Pages in PDF File: 24

JEL Classification: D82, L51

working papers series


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Date posted: October 23, 2001  

Suggested Citation

Martimort, David and Stole, Lars, Common Agency Equilibria with Discrete Mechanisms and Discrete Types (October 2001). CESifo Working Paper Series No. 572. Available at SSRN: http://ssrn.com/abstract=287115

Contact Information

David Martimort
University of Toulouse 1 - Industrial Economic Institute (IDEI) ( email )
Manufacture des Tabacs
21 Allee de Brienne bat. F
Toulouse Cedex, F-31000
France
+33 5 6112 8614 (Phone)
+33 5 6112 8637 (Fax)
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Lars A. Stole (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7309 (Phone)
773-702-0458 (Fax)
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