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Trading with a common agent under complete information: A characterization of Nash equilibria

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Author Info

  • Chiesa, Gabriella
  • Denicolò, Vincenzo

Abstract

We analyze an abstract model of trading where N principals submit quantity-payment schedules that describe the contracts they offer to an agent, and the agent then chooses how much to trade with every principal. This represents a special class of common agency games with complete information. We study all the subgame perfect Nash equilibria of these games, not only truthful ones, providing a complete characterization of equilibrium payoffs. In particular, we show that the equilibrium that is Pareto-dominant for the principals is not truthful when there are more than two of them. We also provide a partial characterization of equilibrium strategies.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 144 (2009)
Issue (Month): 1 (January)
Pages: 296-311

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Handle: RePEc:eee:jetheo:v:144:y:2009:i:1:p:296-311

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Web page: http://www.elsevier.com/locate/inca/622869

Related research

Keywords: Common agency Supply schedules Truthful equilibrium Minimum rent equilibrium;

References

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Citations

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Cited by:
  1. O. Amerighi & G. De Feo, 2009. "Is Competition for FDI Bad for Regional Welfare?," Working Papers 680, Dipartimento Scienze Economiche, Universita' di Bologna.
  2. Antonio Nicita & Simone Sepe, 2012. "The Hold-up Problem Under Common Agency," Department of Economics University of Siena 636, Department of Economics, University of Siena.
  3. Hoernig, Steffen & Valletti, Tommaso, 2010. "When two-part tariffs are not enough: Mixing with nonlinear pricing," CEPR Discussion Papers 7720, C.E.P.R. Discussion Papers.
  4. Martimort, David & Stole, Lars, 2011. "Public Contracting in Delegated Agency Games," MPRA Paper 32874, University Library of Munich, Germany.
  5. Martimort, David & Stole, Lars, 2009. "Selecting Equilibria in Common Agency Games," Open Access publications from University of Toulouse 1 Capitole http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.

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