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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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  • Claudio Mezzetti, 1997. "Common Agency with Horizontally Differentiated Principals," RAND Journal of Economics, The RAND Corporation, vol. 28(2), pages 323-345, Summer.
  • Handle: RePEc:rje:randje:v:28:y:1997:i:summer:p:323-345
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    Cited by:

    1. Laffont, Jean-Jacques & Pouyet, Jerome, 2004. "The subsidiarity bias in regulation," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 255-283, January.
    2. Olsen, Trond E. & Osmundsen, Petter, 2003. "Spillovers and international competition for investments," Journal of International Economics, Elsevier, vol. 59(1), pages 211-238, January.
    3. Lee, Frances (Zhiyun Xu), 2013. "Trading between agents for a better match," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 501-515.
    4. David Martimort & Lars Stole, 2009. "Market participation in delegated and intrinsic common-agency games," RAND Journal of Economics, RAND Corporation, vol. 40(1), pages 78-102.
    5. Martimort David & Stole Lars, 2003. "Contractual Externalities and Common Agency Equilibria," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 3(1), pages 1-40, July.
    6. d'Aspremont, Claude & Dos Santos Ferreira, Rodolphe, 2010. "Oligopolistic competition as a common agency game," Games and Economic Behavior, Elsevier, vol. 70(1), pages 21-33, September.
    7. Khalil, Fahad & Martimort, David & Parigi, Bruno, 2007. "Monitoring a common agent: Implications for financial contracting," Journal of Economic Theory, Elsevier, vol. 135(1), pages 35-67, July.
    8. Graham Mallard, 2014. "Static Common Agency And Political Influence: An Evaluative Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 28(1), pages 17-35, February.
    9. Nadide Banu OLCAY, 2016. "A common agency within bureaucracy," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(607), S), pages 73-102, Summer.
    10. Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, Elsevier.
    11. Jensen, S., 2000. "Price Discrimination and Three Part Tariffs in a Duopoly," Papers 3/2000, Norwegian School of Economics and Business Administration-.
    12. Nicola Lacetera, 2003. "Incentives and spillovers in R&D activities: an agency-theoretic analysis of industry-university relations," Microeconomics 0312004, EconWPA.
    13. Thomas A. Gresik, 2001. "The Taxing Task of Taxing Transnationals," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 800-838, September.
    14. Martimort, David & Semenov, Aggey, 2008. "Ideological uncertainty and lobbying competition," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 456-481, April.
    15. Socha, Karolina Z. & Bech, Mickael, 2011. "Physician dual practice: A review of literature," Health Policy, Elsevier, vol. 102(1), pages 1-7, September.

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