Efficiency in complementary partnerships with competition
Author
Sand, Jan YngveAbstract
This paper investigates a market with strictly complementary inputs, with
a particular emphasis on how efficiency can be implemented when the productive
firms undertake unobservable effort. It is shown that simple linear sharing
rules cannot implement socially optimal effort, but a modified linear sharing
rule can implement the first-best outcome and a restricted linear sharing rule
can be used to implement the second-best outcome. In addition, problems
associated with commitment to the sharing rule is discussed.
Publisher
Universitetet i TromsøUniversity of Tromsø
Series
Working paper series in economics and management, 2006, nr 1Metadata
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