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Editor: Universidad Carlos III de Madrid. Departamento de Economía

Issued date: 2011-03

ISSN: 2340-5031

Serie-No.: UC3M Working papers. Economics11-02

Keywords: Bargaining , Adverse selection , Learning , Information , Externalities , Delay

JEL Classification: C78 , D82 , D83 , L10

Rights: Atribución-NoComercial-SinDerivadas 3.0 España

Abstract:This paper introduces an agency relationship into a dynamic game with informational externalities. Two principals bargain with their respective agents about the production cost which is the private information of the agents and is correlated between them. We fThis paper introduces an agency relationship into a dynamic game with informational externalities. Two principals bargain with their respective agents about the production cost which is the private information of the agents and is correlated between them. We find that the agency relationship creates an incentive for simultaneous production, even if this involves an inefficient delay. As the commitment power of the principals decreases, this incentive becomes stronger. When principals compete, the effect of competition is decomposed into two parts. Inter-period competition from past and future actions pushes principals towards simultaneous actions, while intra-period competition from concurrent actions does the opposite.+-





Author: Drugov, Mikhail

Source: http://e-archivo.uc3m.es


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Universidad Carlos III de Madrid Repositorio institucional e-Archivo http:--e-archivo.uc3m.es Departamento de Economía DE - Working Papers.
Economics.
WE 2011-03 Intra-firm bargaining and learning in a market equilibrium Drugov, Mikhail http:--hdl.handle.net-10016-10439 Descargado de e-Archivo, repositorio institucional de la Universidad Carlos III de Madrid Working Paper 11-02 Economic Series March, 2011 Departamento de Economía Universidad Carlos III de Madrid Calle Madrid, 126 28903 Getafe (Spain) Fax (34) 916249875 Intra-Firm Bargaining and Learning in a Market Equilibrium* Mikhail Drugov† March 1, 2011 Abstract This paper introduces an agency relationship into a dynamic game with informational externalities.
Two principals bargain with their respective agents about the production cost which is the private information of the agents and is correlated between them.
We find that the agency relationship creates an incentive for simultaneous production, even if this involves an inefficient delay.
As the commitment power of the principals decreases, this incentive becomes stronger.
When principals compete, the effect of competition is decomposed into two parts.
Inter-period competition (from past and future actions) pushes principals towards simultaneous actions, while intra-period competition (from concurrent actions) does the opposite. JEL Classification: C78, D82, D83, L10. Keywords: bargaining, adverse selection, learning, information, externalities, delay. * I thank Jacques Crémer, Guido Friebel, Bruno Jullien, Rocco Macchiavello, Margaret Meyer, Eric Rasmusen, Patrick Rey, Christian Ruzzier, François Salanié, Bruno Strulovici, Jean Tirole, Marta Troya Martinez and seminar and conference participants at the Universities of Bocconi, Bristol, Carlos III de Madrid, Copenhagen, Edinburgh, Humboldt-Free and Oxford, HEC Montreal, MIT, EEA (Barcelona), CRETA workshop (Warwick), workshop on IO (Lecce) and IIOC (Boston) for useful comments and suggestio...





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