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Oligopolistic Screening and Two-way distortion

  • Federco Etro

    ()

  • Michela Cella

    ()

We analyze the choice of incentive contracts by olipolistic ?rms that compete on the product market. Managers have private information and in the ?rst stage they exert cost reducing e¤ort. In equilibrium the standard ?no distortion at the top? property disappears and two way distortions are optimal. We extend our analysis to other informational, contractual and competitive settings.

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File URL: http://dipeco.economia.unimib.it/repec/pdf/mibwpaper200.pdf
File Function: First version, 2010
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Paper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 200.

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Length: 28 pages
Date of creation: Nov 2010
Date of revision: Nov 2010
Handle: RePEc:mib:wpaper:200
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  1. Marc IVALDI & David MARTIMORT, 1994. "Competition under Nonlinear Pricing," Annales d'Economie et de Statistique, ENSAE, issue 34, pages 71-114.
  2. Lockwood, B., 1999. "Production Externalities and Two-Way Distortion in Principal-Multi-Agent Problems," The Warwick Economics Research Paper Series (TWERPS) 527, University of Warwick, Department of Economics.
  3. Michael Raith, 2003. "Competition, Risk, and Managerial Incentives," American Economic Review, American Economic Association, vol. 93(4), pages 1425-1436, September.
  4. Oliver D. Hart, 1983. "The Market Mechanism as an Incentive Scheme," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 366-382, Autumn.
  5. Brainard, S Lael & Martimort, David, 1996. "Strategic Trade Policy Design with Asymmetric Information and Public Contracts," Review of Economic Studies, Wiley Blackwell, vol. 63(1), pages 81-105, January.
  6. Maggi G. & Rodriguez-Clare A., 1995. "On Countervailing Incentives," Journal of Economic Theory, Elsevier, vol. 66(1), pages 238-263, June.
  7. Barbara J. Spencer & James A. Brander, 1982. "Strategic Commitment with R&D: The Symmetric Case," Working Papers 516, Queen's University, Department of Economics.
  8. Bertoletti, Paolo & Poletti, Clara, 1996. "A Note on Endogenous Firm Efficiency in Cournot Models of Incomplete Information," Journal of Economic Theory, Elsevier, vol. 71(1), pages 303-310, October.
  9. Martin Stephen, 1993. "Endogenous Firm Efficiency in a Cournot Principal-Agent Model," Journal of Economic Theory, Elsevier, vol. 59(2), pages 445-450, April.
  10. Lewis, Tracy R. & Sappington, David E. M., 1989. "Countervailing incentives in agency problems," Journal of Economic Theory, Elsevier, vol. 49(2), pages 294-313, December.
  11. Federico Etro & Michela Cella, 2013. "Equilibrium Principal-Agent Contracts: Competition and R&D Incentives," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(3), pages 488-512, 09.
  12. Piccolo, Salvatore & D'Amato, Marcello & Martina, Riccardo, 2008. "Product market competition and organizational slack under profit-target contracts," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1389-1406, November.
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