Static Common Agency

Ursula F. Ott

Chapter 5 in International Joint Ventures, 2006, pp 83-142 from Palgrave Macmillan

Abstract: Abstract Considering an international joint venture as a game of three players with different tasks, capacities and strengths, the focus of this chapter lies on showing the theoretical background of the static common agency problem. As far as two parent firms located in two countries with special regulations are concerned, there exists at least one agent on the other side. The agent has hidden information of the joint venture enterprise. To reveal this information, incentive schemes and reporting methods could be applied. The theory of multi-principals describes how different incentive mechanisms compete with each other. Regarding the set of relationships between several parent firms and the joint venture, they regulate a set of competing contracts in which the control of the process is shared among these different participants. The design of control and communication channels is crucial to the underlying problem.

Keywords: Joint Venture; Moral Hazard; Adverse Selection; Incentive Scheme; International Joint Venture (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-62546-4_5

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DOI: 10.1057/9780230625464_5

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