Games Played in a Contracting Environment

V Bhaskar

No 583, Economics Discussion Papers from University of Essex, Department of Economics

Abstract: We analyze situations where a player must contract with the monopoly supplier of an essential input in order to play an action in a strategic form game. Supplier monopoly power does not distort the equilibrium distribution over player actions under private contracting, but may dramatically affect the equilibrium actions under public contracting. When \ a player randomizes between actions, suppliers for the different actions behave as though they are producing perfect substitutes when contracts are private; when contracts are public, it is as though they are producing perfect complements.

Date: 2004-10-12
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