IDEAS home Printed from
   My bibliography  Save this paper

Equilibrium in Contracts with Competing Agencies


  • Arupratan Daripa


We develop a theory of contracts with competing agencies under symmetric information and under moral hazard. In contrast to much of the literature, we allow the agencies to choose from a general contract space. Under the assumption of supermodularity, we show that in both cases the equilibria in contracts have a characterization in terms of very simple contracts. Using these simple contracts we show that under symmetric information, the set of outcomes supportable in equilibrium coincides with the set of individually rational outcomes. While this characterization is new and possibly useful, the result is well known. However, we show that, the introduction of moral hazard (agent's action unobservable) has a striking effect -- it reduces the supportable set to only a subset of the collusive outcomes. We also show that the simple contracts are optimal, which makes them a relevant tool for policy analysis and makes possible applications to international trade, strategic R&D, oligipolistic competition with contractual delegation and taxation of oligopoly.

Suggested Citation

  • Arupratan Daripa, 1996. "Equilibrium in Contracts with Competing Agencies," Archive Discussion Papers 9603, Birkbeck, Department of Economics, Mathematics & Statistics.
  • Handle: RePEc:bbk:bbkewp:9603

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.


    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:bbk:bbkewp:9603. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.