Endogenous Formation of Partnership with Moral Hazard

Maria Paz Espinosa and Ines Macho-Stadler

No 565, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: We analyze the formation of partnerships as a sequential choice-of-sizes game with moral hazard within coalitions; once formed, partnerships compete a la Cournot in the marketplace. We show that when moral hazard within coalitions is very severe, no partnership will form. However, when moral hazard is not too severe the coalition structure will be either similar or more concentrated than without moral hazard. We also show that, while without moral hazard too many coalitions are formed in equilibrium as compared to the efficient outcome, moral hazard may be responsible for an inefficiency of opposite sign.

Date: 2000-08-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://fmwww.bc.edu/RePEc/es2000/0565.pdf main text (application/pdf)

Related works:
Journal Article: Endogenous formation of competing partnerships with moral hazard (2003)
Working Paper: ENDOGENOUS FORMATION OF PARTNERSHIPS WITH MORAL HAZARD
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:ecm:wc2000:0565

Access Statistics for this paper

More papers in Econometric Society World Congress 2000 Contributed Papers from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Christopher F. Baum ().