The Allocation of Authority in a Joint Project under Limited Liability
AbstractAuthority is modeled as the right to undertake a noncontractible decision in a joint project. The decision-maker is assumed to exert an externality on the other parties; overall surplus is shared according to generalized Nash bargaining. Under limited liability, the agent whose marginal costs increase faster receives authority if the agents' cost functions are very different. If the agents have similar marginal cost functions, bargaining power determines the allocation of authority. Possible applications include the introduction of a new product.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.
Volume (Year): 163 (2007)
Issue (Month): 3 (September)
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Find related papers by JEL classification:
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- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Patrick W. Schmitz, 2005.
"Allocating Control in Agency Problems with Limited Liability and Sequential Hidden Actions,"
RAND Journal of Economics,
The RAND Corporation, vol. 36(2), pages 318-336, Summer.
- Schmitz, Patrick W., 2005. "Allocating Control in Agency Problems with Limited Liability and Sequential Hidden Actions," CEPR Discussion Papers 5145, C.E.P.R. Discussion Papers.
- Patrick W. Schmitz, 2005. "Allocating control in agency problems with limited liability and sequential hidden actions," Bonn Econ Discussion Papers bgse27_2005, University of Bonn, Germany.
- Roider, Andreas, 2007. "Risk, Delegation, and Project Scope," IZA Discussion Papers 3117, Institute for the Study of Labor (IZA).
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