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Three Principles of Competitive Nonlinear Pricing

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  • Frank Page

    ()
    (University of Alabama)

  • Paulo Monteiro

    ()
    (EPGE/FGV, Brazil)

Abstract

This paper makes three contributions: (1) A competitive revelation principle for contracting games in which several principals compete for one privately informed agent. Specifically, given any profile of incentive compatible indirect contracting mechanisms, there exists an incentive compatible direct contracting mechanism that, in all circumstances, generates the same contract selection as the profile of indirect mechanisms. (2) A competitive taxation principle. That is, given any incentive compatible direct contracting mechanism, there exists a unique profile of nonlinear pricing schedules that implements the mechanism and the converse. (3) Existence of Nash equilibrium for the mixed extension of the nonlinear pricing game. This is proven using the taxation principle (2 above) and a result due to Reny, Econometrica 1999. To appear as a CERMSEM, Paris 1, Working Paper and also on http://www.warwick.ac.uk/fac/soc/Economics/research/twerps.html.

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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 28 (2001)
Issue (Month): 11 ()
Pages: A0

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Handle: RePEc:ebl:ecbull:eb-01aa0014

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References

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  1. Myerson, Roger B., 1982. "Optimal coordination mechanisms in generalized principal-agent problems," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 67-81, June.
  2. Hammond, Peter J, 1979. "Straightforward Individual Incentive Compatibility in Large Economies," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 46(2), pages 263-82, April.
  3. Page, Frank H, Jr, 1992. "Mechanism Design for General Screening Problems with Moral Hazard," Economic Theory, Springer, Springer, vol. 2(2), pages 265-81, April.
  4. Carlier, Guillaume, 2001. "A general existence result for the principal-agent problem with adverse selection," Journal of Mathematical Economics, Elsevier, vol. 35(1), pages 129-150, February.
  5. Rochet, J. C., 1985. "The taxation principle and multi-time Hamilton-Jacobi equations," Journal of Mathematical Economics, Elsevier, vol. 14(2), pages 113-128, April.
  6. Philip J. Reny, 1999. "On the Existence of Pure and Mixed Strategy Nash Equilibria in Discontinuous Games," Econometrica, Econometric Society, Econometric Society, vol. 67(5), pages 1029-1056, September.
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Cited by:
  1. Prokopovych, Pavlo & Yannelis, Nicholas C., 2014. "On the existence of mixed strategy Nash equilibria," Journal of Mathematical Economics, Elsevier, vol. 52(C), pages 87-97.
  2. Frank H. Page, Jr. & Paulo K. Monteiro, 2007. "Endogenous Mechanisms and Nash Equilibrium in Competitive Contracting," Caepr Working Papers, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington 2007-025, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
  3. Carmona, Guilherme & Fajardo, José, 2009. "Existence of equilibrium in common agency games with adverse selection," Games and Economic Behavior, Elsevier, Elsevier, vol. 66(2), pages 749-760, July.
  4. Paulo Klinger Monteiro & Frank H. Page Jr., 2005. "Uniform payoff security and Nash equilibrium in metric games," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers), HAL halshs-00197491, HAL.
  5. Monteiro, Paulo Klinger & Page Jr, Frank H., 2007. "Uniform payoff security and Nash equilibrium in compact games," Journal of Economic Theory, Elsevier, Elsevier, vol. 134(1), pages 566-575, May.
  6. Monteiro, Paulo K. & Page Jr., Frank H., 2009. "Endogenous mechanisms and Nash equilibrium in competitive contracting games," Journal of Mathematical Economics, Elsevier, vol. 45(9-10), pages 664-678, September.
  7. Florence LACHET-TOUYA, 2013. "Tax Interactions with Asymmetric Information and Nonlinear Instruments," Working Papers, CATT - UPPA - Université de Pau et des Pays de l'Adour 2012-2013_9, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Jul 2013.
  8. Nuno Gouveia, 2004. "General equilibrium with asymmetric information and default penalties," Cahiers de la Maison des Sciences Economiques, Université Panthéon-Sorbonne (Paris 1) b05051, Université Panthéon-Sorbonne (Paris 1), revised Jan 2005.
  9. Ulrich Horst & Santiago Moreno-Bromberg, 2010. "Efficiency and Equilibria in Games of Optimal Derivative Design," SFB 649 Discussion Papers, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany SFB649DP2010-035, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  10. Florence Lachet-Touya, 2012. "Les interactions fiscales verticales à la lumière de la théorie des multiprincipaux," Recherches économiques de Louvain, De Boeck Université, De Boeck Université, vol. 78(1), pages 27-46.
  11. Page Jr., Frank H., 2008. "Catalog competition and stable nonlinear prices," Journal of Mathematical Economics, Elsevier, vol. 44(7-8), pages 822-835, July.
  12. Oriol Carbonell-Nicolau, 2011. "The Existence of Perfect Equilibrium in Discontinuous Games," Games, MDPI, Open Access Journal, MDPI, Open Access Journal, vol. 2(3), pages 235-256, July.
  13. Massimo Morelli & Huanxing Yang & Lixin Ye, 2010. "Competitive Nonlinear Taxation and Constitutional Choice," Economics Working Papers, European University Institute ECO2010/14, European University Institute.
  14. repec:hal:journl:halshs-00197491 is not listed on IDEAS
  15. Martimort, David & Stole, Lars, 2012. "Representing equilibrium aggregates in aggregate games with applications to common agency," Games and Economic Behavior, Elsevier, Elsevier, vol. 76(2), pages 753-772.
  16. Schmitz, Patrick W., 2003. "On Second Price Auctions and Imperfect Competition," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3774, C.E.P.R. Discussion Papers.
  17. repec:hal:journl:halshs-00195526 is not listed on IDEAS
  18. Yu Chen, 2013. "Decentralizability of Multi-Agency Contracting with Bayesian Implementation," Caepr Working Papers, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington 2013-003, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.

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