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Delegation of Bargaining and Power

  • Segendorff, Björn

    (Dept. of Economics, Stockholm School of Economics)

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    Two principals simultaneously appoint one agent each and decide how much power to give to their agents. The agents' task is to bargain over the provision of a public good. Power here means the right to decide the own side's provision if negotiations break down. In equilibrium the principals delegate to agents that are relatively disinterested in the public good and give them all power. The fact that both principals have the possibility to delegate is, in equilibrium, harmful to at least one of them. The equilibrium may even be Pareto dominated by the outcome under autarchy.

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    Paper provided by Stockholm School of Economics in its series SSE/EFI Working Paper Series in Economics and Finance with number 248.

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    Length: 20 pages
    Date of creation: 31 Aug 1998
    Date of revision:
    Handle: RePEc:hhs:hastef:0248
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