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Common Agency and Partial Cooperation

Kevin Siqueira

Journal of Public Economic Theory, 2001, vol. 3, issue 3, 309-39

Abstract: A modified common agency model is used to investigate the impact of partial cooperation on agent incentives. In the case where principals move simultaneously, it is shown that partial cooperation is self-defeating from the organizing principals' perspective despite a strengthening of agent incentives and effort. In the second scenario, where the organizing principals have a first-mover advantage, it is demonstrated that not only are individual cooperating principals better off but the outcome in terms of agent incentives and effort is constrained Pareto efficient. This latter scenario illustrates the possibility that partial cooperation, when coupled with a strategic advantage, improves efficiency. Copyright 2001 by Blackwell Publishing Inc.

Date: 2001
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Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

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