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Games Played in a Contracting Environment

  • V. Bhaskar


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.

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Date of creation: 12 Oct 2004
Date of revision:
Handle: RePEc:esx:essedp:583
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  1. Michael L. Katz, 1991. "Game-Playing Agents: Unobservable Contracts as Precommitments," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 307-328, Autumn.
  2. Matthew O. Jackson & Simon Wilkie, 2005. "Endogenous Games and Mechanisms: Side Payments Among Players," Review of Economic Studies, Oxford University Press, vol. 72(2), pages 543-566.
  3. Chaim Fershtman & Ehud Kalai, 1993. "Unobserved Delegation," Discussion Papers 1043, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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  4. Prat, A. & Rustichini, A., 1999. "Games Played Through Agents," Discussion Paper 1999-68, Tilburg University, Center for Economic Research.
  5. Fershtman, Chaim & Judd, Kenneth L & Kalai, Ehud, 1991. "Observable Contracts: Strategic Delegation and Cooperation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 551-59, August.
  6. Caillaud Bernard & Jullien Bruno & Picard Pierre, 1991. "Competing vertical structures : precommitment and renegotiation," CEPREMAP Working Papers (Couverture Orange) 9125, CEPREMAP.
  7. Ziss, Steffen, 1997. "A Solution to the Problem of Externalities When Agents Are Well-Informed: Comment," American Economic Review, American Economic Association, vol. 87(1), pages 231-35, March.
  8. McAfee, R Preston & Schwartz, Marius, 1994. "Opportunism in Multilateral Vertical Contracting: Nondiscrimination, Exclusivity, and Uniformity," American Economic Review, American Economic Association, vol. 84(1), pages 210-30, March.
  9. Kockesen, L. & Ok, E., 1999. "Strategic Delegation by Unobservable Incentive Contracts," Working Papers 99-11, C.V. Starr Center for Applied Economics, New York University.
  10. Hart, O. & Tirole, J., 1990. "Vertical Integration And Market Foreclosure," Working papers 548, Massachusetts Institute of Technology (MIT), Department of Economics.
  11. Simon, Leo K & Stinchcombe, Maxwell B, 1995. "Equilibrium Refinement for Infinite Normal-Form Games," Econometrica, Econometric Society, vol. 63(6), pages 1421-43, November.
  12. Harris, Christopher & Reny, Philip & Robson, Arthur, 1995. "The Existence of Subgame-Perfect Equilibrium in Continuous Games with Almost Perfect Information: A Case for Public Randomization," Econometrica, Econometric Society, vol. 63(3), pages 507-44, May.
  13. Vickers, John, 1985. "Delegation and the Theory of the Firm," Economic Journal, Royal Economic Society, vol. 95(380a), pages 138-47, Supplemen.
  14. Ilya Segal, 1999. "Contracting With Externalities," The Quarterly Journal of Economics, MIT Press, vol. 114(2), pages 337-388, May.
  15. Baye, Michael R. & Morgan, John, 1999. "A folk theorem for one-shot Bertrand games," Economics Letters, Elsevier, vol. 65(1), pages 59-65, October.
  16. Simon, Leo K & Zame, William R, 1990. "Discontinuous Games and Endogenous Sharing Rules," Econometrica, Econometric Society, vol. 58(4), pages 861-72, July.
  17. V. Bhaskar, 2005. "Commitment and Observability in an Economic Environment," Economics Discussion Papers 596, University of Essex, Department of Economics.
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