Many real world transactions occur in a common agency environment in which an agent interacts with several principals having competing interests. The hold-up literature, however, has so far neglected to investigate common agency transactions. In this paper, we consider the hold-up problem that arises in a context where there are a monopolistic seller and multiple buyers on the one side and all the parties on the other are required to make specific self-investments. Our contribution is twofold. First, we show that absent initial contracts (i.e., preliminary agreements) between the parties, total efficiency increases when the buyers act competitively using implicit contractual coordination, i.e., contractual menus. Second, we show that introducing initial simple contracts allows parties to reach the first best only under cooperative common agency. Absent this machinery, competition among the principals emerges as a more efficient governance structure for common agency in incomplete transactions.
Scheda prodotto non validato
Scheda prodotto in fase di analisi da parte dello staff di validazione
|Titolo:||The Hold-up Problem Under Common Agency|
|Citazione:||Nicita, A., & Sepe, S.M. (2012). The Hold-up Problem Under Common Agency. QUADERNI DEL DIPARTIMENTO DI ECONOMIA POLITICA, 2012(636), 1.|
|Appare nelle tipologie:||1.1 Articolo in rivista|