IDEAS home Printed from https://ideas.repec.org/a/bpj/bejtec/v8y2008i1n3.html
   My bibliography  Save this article

Counter Marginalization of Information Rents: Implementing Negatively Correlated Compensation Schemes for Colluding Parties

Author

Listed:
  • Celik Gorkem

    (University of British Columbia)

Abstract

A principal contracts with a productive agent whose production cost is private information and with an insurer who can insure the principal against variations in the payment to the agent. The insurer and the agent can collude in their responses to the principal's contract. Non-cooperative play of the principal's contract constitutes the outside option for the colluding parties. In this setup, we characterize the implementable outcomes for the principal. We then identify the optimal implementable outcome under the assumption that the principal faces a budget constraint. The optimal outcome provides the principal with "partial" insurance. For higher realizations of the production cost, the budget may not be exhausted even though the principal is not directly concerned with the unspent portion of the monetary funds.

Suggested Citation

  • Celik Gorkem, 2008. "Counter Marginalization of Information Rents: Implementing Negatively Correlated Compensation Schemes for Colluding Parties," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-45, February.
    • Handle: RePEc:bpj:bejtec:v:8:y:2008:i:1:n:3
    DOI: 10.2202/1935-1704.1363
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1935-1704.1363
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1935-1704.1363?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gick, Wolfgang, 2015. "A Theory of Delegated Contracting," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113069, Verein für Socialpolitik / German Economic Association.
    2. Celik, Gorkem, 2009. "Mechanism design with collusive supervision," Journal of Economic Theory, Elsevier, vol. 144(1), pages 69-95, January.
    3. Bilgehan Karabay, 2017. "Optimal Regulation of Multinationals under Collusion," The World Economy, Wiley Blackwell, vol. 40(8), pages 1687-1706, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejtec:v:8:y:2008:i:1:n:3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.