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Multitask Agency and Contract Choice: An Empirical Exploration

Margaret Slade ()

International Economic Review, 1996, vol. 37, issue 2, 465-86

Abstract: The multitask-agency problem is examined empirically using contracts between private, integrated oil companies and their service stations in the city of Vancouver. The empirical tests assess how variations in the characteristics of one task affect the choice of agent-compensation scheme for another. Comparative statics from the model predict that higher-powered incentives will be offered for gasoline sales when the secondary activity is not highly complementary with gasoline retailing, where complementarity is measured by the cross-price demand effect, the covariation in uncertainty, and the degree of effort substitutability. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1996
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Handle: RePEc:ier:iecrev:v:37:y:1996:i:2:p:465-86