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Optimal Auditing Under Intermediated Contracting

Author

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  • Wolfgang Gick

    (Dartmouth College)

Abstract

This paper builds on Faure-Grimaud and Martimort’s [Economics Letters 71 (2001) 75-82] analysis of intermediated contracting. I argue that intermediated contracting permits one form of auditing, in which the sub-contract offered to the firm is examined, contingent on the intermediary’s report. Auditing reduces the intermediary’s rent and increases allocative efficiency.

Suggested Citation

  • Wolfgang Gick, 2004. "Optimal Auditing Under Intermediated Contracting," Microeconomics 0411003, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpmi:0411003
    Note: Type of Document - pdf; pages: 7
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mic/papers/0411/0411003.pdf
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    References listed on IDEAS

    as
    1. Faure-Grimaud, Antoine & Martimort, David, 2001. "On some agency costs of intermediated contracting," Economics Letters, Elsevier, vol. 71(1), pages 75-82, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Intermediated Contracting; Grand Contract; Optimal Auditing.;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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