Endogenous Market Structures and Contract Theory

Federico Etro ()

No 181, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: I study the role of unilateral strategic contracts for firms active in markets with price competition and endogenous entry. Traditional results change substantially when the market structure is endogenous rather than exogenous. They concern 1) contracts of managerial delegation to non-profit maximizers, 2) incentive contracts in the presence of moral hazard on cost reducing activities, 3) screening contracts in case of asymmetric information on the productivity of the managers, 4) vertical contracts of franchising in case of hold-up problems and 5) tying contracts by monopolists competing also in secondary markets. Firms use always these contracts to strengthen price competition and manage to obtain positive pro?ts in spite of free entry.

Keywords: Strategic delegation; Incentive contracts; Screening contracts; Franchising; Tying; Endogenous market structures (search for similar items in EconPapers)
JEL-codes: L11 L13 L22 L43 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2010-03, Revised 2010-03
New Economics Papers: this item is included in nep-bec, nep-com, nep-cta and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:mib:wpaper:181

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