Intra-firm bargaining and learning in a market equilibrium
AbstractThis paper introduces an agency relationship into a dynamic game with informational externalities. Two principals bargain with their respective agents about the production cost which is the private information of the agents and is correlated between them. We find that the agency relationship creates an incentive for simultaneous production, even if this involves an inefficient delay. As the commitment power of the principals decreases, this incentive becomes stronger. When principals compete, the effect of competition is decomposed into two parts. Inter-period competition (from past and future actions) pushes principals towards simultaneous actions, while intra-period competition (from concurrent actions) does the opposite.
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Bibliographic InfoPaper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we1102.
Date of creation: Mar 2011
Date of revision:
Bargaining; Adverse selection; Learning; Information; Externalities; Delay;
Find related papers by JEL classification:
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-26 (All new papers)
- NEP-BEC-2011-03-26 (Business Economics)
- NEP-COM-2011-03-26 (Industrial Competition)
- NEP-CTA-2011-03-26 (Contract Theory & Applications)
- NEP-GTH-2011-03-26 (Game Theory)
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.:
- Gary-Bobo, Robert J. & Spiegel, Yossi, 2003.
"Optimal State-Contingent Regulation under Limited Liability,"
CEPR Discussion Papers
3920, C.E.P.R. Discussion Papers.
- Robert Gary‐Bobo & Yossi Spiegel, 2006. "Optimal state‐contingent regulation under limited liability," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 431-448, 06.
- R. Gary-Bobo & Y. Spiegel, 2003. "Optimal state-contingent regulation under limited liability," THEMA Working Papers 2003-09, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
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