We analyze situations where a player must contract with the monopoly supplier of an essential input in order to play an action in a strategic form game. Supplier monopoly power does not distort the equilibrium distribution over player actions under private contracting, but may dramatically affect the equilibrium actions under public contracting. When \ a player randomizes between actions, suppliers for the different actions behave as though they are producing perfect substitutes when contracts are private; when contracts are public, it is as though they are producing perfect complements.
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Paper provided by University of Essex, Department of Economics in its series Economics Discussion Papers with number
583.
References listed on IDEAS 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.:
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Other versions:
Fershtman, Chaim & Kalai, Ehud, 1997.
"Unobserved Delegation,"
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Fershtman, C. & Kalai, E., 1993.
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