Contracting for Dynamic Efficiency

Calcott Paul and Vladimir Petkov ()
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Calcott Paul: Victoria University of Wellington, paul.calcott@vuw.ac.nz

The B.E. Journal of Theoretical Economics, 2010, vol. 10, issue 1, 22

Abstract: This paper explores implementation of efficiency in an alternating-move game. Incentives are provided with contracts that specify a scheme of monetary obligations. The analysis focuses on time-invariant payment schedules that satisfy budget balance. We derive contracting forms that generate efficient investments in Markov-perfect equilibria. Some notable solutions are highlighted: repeated transfer of ownership, partnership and Markovian expectation damages.

Keywords: Markov-perfect equilibrium; contract damages; efficiency (search for similar items in EconPapers)
Date: 2010
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DOI: 10.2202/1935-1704.1675

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