EconPapers    
Economics at your fingertips  
 

A model of Cooperative Investments with Three Players

David Bartolini ()

No 312, Working Papers from Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali

Abstract: We consider a model with three players in which one of them has the possibility to make a relationship-specific investment which produces an innovation. The innovation affects only the payoff of the other two players - hence, a cooperative innovation. We show that, in some cases, the presence of a third player reduces the hold-up problem, but when the competition becomes too fierce it may lead to overinvestment. In contrast to the prevailing literature on contract theory, we show that, even with a cooperative innovation, the possibility to sign a simple (incomplete) contract can still influence the ex-ante incentive to invest. The model is then applied to investigate the separation of regulatory powers where a monopolistic firm can be regulated either by one or two regulators.

Keywords: hold-up; innovation; multilateral bargaining (search for similar items in EconPapers)
JEL-codes: C70 L22 L51 (search for similar items in EconPapers)
Pages: 23
Date: 2008-02
New Economics Papers: this item is included in nep-mic
References: Add references at CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed

Downloads: (external link)
http://docs.dises.univpm.it/web/quaderni/pdf/312.pdf First version, 2008 (application/pdf)

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:anc:wpaper:312

Access Statistics for this paper

More papers in Working Papers from Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali Contact information at EDIRC.
Bibliographic data for series maintained by Maurizio Mariotti ().

 
Page updated 2021-10-13
Handle: RePEc:anc:wpaper:312