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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, vol. 59(1), pages 211-238, January.
  2. d’ASPREMONT, Claude & DOS SANTOS FERREIRA, Rodolphe, . "Oligopolistic competition as a common agency game," CORE Discussion Papers RP -2238, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Thomas A. Gresik, 2001. "The Taxing Task of Taxing Transnationals," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 800-838, September.
  4. Lee, Frances (Zhiyun Xu), 2013. "Trading between agents for a better match," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 501-515.

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