Résumé
This work studies how the introduction of competition to the side of the market offering trading contracts affects the equilibrium investment profile in a bilateral investment game. By using a common agency framework, where contracts are not exclusive, we find that the equilibrium investment profile depends on the competitiveness of the equilibrium outcome. Full efficiency can only be implemented when the trading outcome is the most competitive. Moreover, lowering the outcome competitiveness is not always Pareto dominant for the parties offering the contracts, and larger social welfare can be obtained with low competitive equilibria.
Mots-clés
bilateral investment; hold-up; competition; Pareto dominance; social surplus;
Codes JEL
- D44: Auctions
- L11: Production, Pricing, and Market Structure • Size Distribution of Firms
Référence
Guillem Roig, « Competition and the Hold‐U p Problem: a Setting with Non‐exclusive Contracts », TSE Working Paper, n° 14-481, 26 mars 2014.
Voir aussi
Publié dans
TSE Working Paper, n° 14-481, 26 mars 2014