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Common Agency with Horizontally Differentiated Principals

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  • Claudio Mezzetti

Abstract

I analyze a common agency relationship where the agent has private information about the difference in his value for two principals. When the principals independently offer incentive contracts, the agent specializes less than is socially efficient, but more than when they cooperate and choose the contract that maximizes their joint payoff. Under both arrangements the agent faces countervailing incentives. The pooling region of types receiving a flat fee is larger and the incentive pay of the remaining types is lower powered under cooperation than under independent contracting. The principals prefer independent contracting with a common agent to exclusive dealing.

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Bibliographic Info

Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 28 (1997)
Issue (Month): 2 (Summer)
Pages: 323-345

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Handle: RePEc:rje:randje:v:28:y:1997:i:summer:p:323-345

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Cited by:
  1. Olsen, Trond E. & Osmundsen, Petter, 2003. "Spillovers and international competition for investments," Journal of International Economics, Elsevier, Elsevier, vol. 59(1), pages 211-238, January.
  2. Thomas A. Gresik, 2001. "The Taxing Task of Taxing Transnationals," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 39(3), pages 800-838, September.
  3. Martimort, David & Semenov, Aggey, 2008. "Ideological Uncertainty and Lobbying Competition," MPRA Paper 6992, University Library of Munich, Germany.
  4. D’ASPREMONT, Claude & DOS SANTOS FERREIRA, Rodolphe, 2005. "Oligopolistic competition as a common agency game," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2005018, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Fahad Khalil & Bruno Parigi & David Martimort, 2007. "Monitoring a Common Agent: implications for financial contracting," Working Papers, University of Washington, Department of Economics UWEC-2003-04-P, University of Washington, Department of Economics.
  6. Martimort David & Stole Lars, 2003. "Contractual Externalities and Common Agency Equilibria," The B.E. Journal of Theoretical Economics, De Gruyter, De Gruyter, vol. 3(1), pages 1-40, July.
  7. Laffont, Jean-Jacques & Pouyet, Jérôme, 2000. "The Subsidiarity Bias in Regulation," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 96, Institut d'Économie Industrielle (IDEI), Toulouse.
  8. Socha, Karolina Z. & Bech, Mickael, 2011. "Physician dual practice: A review of literature," Health Policy, Elsevier, Elsevier, vol. 102(1), pages 1-7, September.
  9. Nicola Lacetera, 2003. "Incentives and spillovers in R&D activities: an agency-theoretic analysis of industry-university relations," Microeconomics, EconWPA 0312004, EconWPA.
  10. Lee, Frances (Zhiyun Xu), 2013. "Trading between agents for a better match," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 31(5), pages 501-515.
  11. Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, Elsevier, Elsevier.

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