Private contracting with externalities: Divide and conquer?

Jeanine Miklós-Thal and Greg Shaffer

International Journal of Industrial Organization, 2017, vol. 50, issue C, 460-472

Abstract: This paper considers the efficacy of divide-and-conquer strategies in principal-agent games involving contracting with externalities. We find that whereas divide-and-conquer offers can arise in equilibrium under some conditions when the principal’s offers are publicly observable, they cannot arise in equilibrium when the principal’s offers are privately observable and the agents hold passive out-of-equilibrium beliefs. This insight applies to technology and platform adoption decisions with network effects, labor relations, settlement negotiations, and input licensing, among others.

Keywords: Principal-agent games; Divide and conquer strategies; Network effects; Two-sided markets; Union formation; Input licensing (search for similar items in EconPapers)
JEL-codes: C72 D82 K41 L13 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167718716300157
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:50:y:2017:i:c:p:460-472

DOI: 10.1016/j.ijindorg.2016.03.002

Access Statistics for this article

International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal

More articles in International Journal of Industrial Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().