Non-Intrinsic Common Agency
Date
01.01.1999
01.01.1999
Authors
Carlo Scarpa, Giacomo Calzolari
JEL Code
L140,L410,D820
L140,L410,D820
Publisher
Economy and Society
Economy and Society
Editor
Fausto Panunzi
Fausto Panunzi
In this paper we analyse a common agency model in which agents can choose with how many principals they want to work, while principals cannot condition contracts on the agent’s decision to accept other contracts. In this case of "non-intrinsic" common agency we characterise the equilibrium. Unless the substitutability between the two outputs is very strong, optimality conditions for principals’ contracts are the same as with intrinsic common agency. However, principals suffer from reciprocal competition, which with "moderate" substitutability increases the informational rent agents obtain in equilibrium.