I study the role of unilateral strategic contracts for firms active in markets with price competition and endogenous entry. Traditional results change substantially when the market structure is endogenous rather than exogenous. They concern 1) contracts of managerial delegation to non-profit maximizers, 2) incentive contracts in the presence of moral hazard on cost reducing activities, 3) screening contracts in case of asymmetric information on the productivity of the managers, 4) vertical contracts of franchising in case of hold-up problems and 5) tying contracts by monopolists competing also in secondary markets. Firms use always these contracts to strengthen price competition and manage to obtain positive pro?ts in spite of free entry

Etro, F. (2010). Endogenous Market Structures and Contract Theory [Working paper del dipartimento].

Endogenous Market Structures and Contract Theory

ETRO, FEDERICO
2010

Abstract

I study the role of unilateral strategic contracts for firms active in markets with price competition and endogenous entry. Traditional results change substantially when the market structure is endogenous rather than exogenous. They concern 1) contracts of managerial delegation to non-profit maximizers, 2) incentive contracts in the presence of moral hazard on cost reducing activities, 3) screening contracts in case of asymmetric information on the productivity of the managers, 4) vertical contracts of franchising in case of hold-up problems and 5) tying contracts by monopolists competing also in secondary markets. Firms use always these contracts to strengthen price competition and manage to obtain positive pro?ts in spite of free entry
Working paper del dipartimento
Strategic delegation; Incentive contracts; Screening contracts; Franchising; Tying; Endogenous market structures
English
mar-2010
Etro, F. (2010). Endogenous Market Structures and Contract Theory [Working paper del dipartimento].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/23035
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