Author: "David Martimort" / Topic: 050207 economics - Searchworks@Jio Institute Digital Library Search Results

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1. Nonlinear Pricing with Average-Price Bias

Author: David Martimort, Lars Stole, Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Paris Jourdan Sciences Economiques (PJSE), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), and University of Chicago
Subjects: Consumption (economics), JEL: D - Microeconomics/D.D4 - Market Structure, Pricing, and Design/D.D4.D42 - Monopoly, media_common.quotation_subject, 05 social sciences, Economic rent, Contrast (statistics), [SHS.ECO]Humanities and Social Sciences/Economics and Finance, JEL: L - Industrial Organization/L.L1 - Market Structure, Firm Strategy, and Market Performance/L.L1.L12 - Monopoly • Monopolization Strategies, Nonlinear system, Pricing schedule, JEL: D - Microeconomics/D.D2 - Production and Organizations/D.D2.D21 - Firm Behavior: Theory, 0502 economics and business, Econometrics, Economics, General Earth and Planetary Sciences, 050207 economics, Empirical evidence, Marginal utility, JEL: D - Microeconomics/D.D1 - Household Behavior and Family Economics/D.D1.D11 - Consumer Economics: Theory, Nonlinear pricing, 050205 econometrics, General Environmental Science, media_common
Abstract: Empirical evidence suggests that consumers facing complex nonlinear prices often make choices based on average (not marginal) prices. Given such behavior, we characterize a monopolist’s optimal nonlinear price schedule. In contrast to the textbook setting, nonlinear prices designed for “ average-price bias” distort consumption downward for consumers with the highest marginal utility and typically feature quantity premia rather than quantity discounts. These properties arise because the bias replaces consumer information rents with “curvature rents.” Whether or not a monopolist prefers consumers with average-price bias depends upon underlying preferences and costs. (JEL D11, D21, D42, L12)
Published: 2020
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2. 'When Olson Meets Dahl': From Inefficient Groups Formation to Inefficient Policy Making

Author: Perrin Lefebvre, David Martimort, Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Paris Jourdan Sciences Economiques (PJSE), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris), and Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE)
Subjects: Mechanism design, Lobbying, Asymmetric information, Sociology and Political Science, Policy making, 05 social sciences, Policy maker, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Collective action, 0506 political science, Free riding, Microeconomics, Information asymmetry, 0502 economics and business, 050602 political science & public administration, Economics, Common agency, 050207 economics
Abstract: International audience; Two conflicting interest groups buy favor from a policy maker. Influence is modeled as a common-agency game with lobbyists proposing monetary contributions contingent on decisions. When the preferences of the group members are common knowledge, groups form efficiently and lobbying competition perfectly aggregates preferences. When those preferences are instead private information, free riding in collective action arises within groups. Free riding implies that the influence of a group is weakened and that lobbying competition imperfectly aggregates preferences. By softening lobbying competition, private information might also increase groups’ payoffs and hurt the policy maker. Importantly, the magnitudes of informational frictions within each group are jointly determined at equilibrium. We draw from these findings a number of implications for the organization of interest groups.
Published: 2020
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3. Contracts as a Barrier to Entry: Impact of Buyer's Asymmetric Information and Bargaining Power

Author: Thomas Trégouët, Jerome Pouyet, David Martimort, Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), École des hautes études en sciences sociales (EHESS), Théorie économique, modélisation et applications (THEMA), Centre National de la Recherche Scientifique (CNRS)-CY Cergy Paris Université (CY), ESSEC Business School, and Essec Business School
Subjects: Service (business), Economics and Econometrics, ComputingMilieux_THECOMPUTINGPROFESSION, [QFIN]Quantitative Finance [q-fin], Strategy and Management, 05 social sciences, Economics, Econometrics and Finance (miscellaneous), exclusionary behavior, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, A share, excessive entry, Microeconomics, Information asymmetry, Bargaining power, foreclosure, 0502 economics and business, Industrial relations, incomplete information, ComputingMilieux_COMPUTERSANDSOCIETY, Business, Foreclosure, 050207 economics, Barriers to entry, 050205 econometrics, Valuation (finance)
Abstract: International audience; An incumbent seller contracts with a buyer and faces the threat of entry. The contract stipulates a price and a penalty for breach if the buyer later switches to the entrant. Sellers are heterogenous in terms of the gross surplus they provide to the buyer. The buyer is privately informed on her valuation for the incumbent's service. Asymmetric information makes the incumbent favor entry as it helps screening buyers. When the entrant has some bargaining power vis-à-vis the buyer and keeps a share of the gains from entry, the incumbent instead wants to reduce entry. The compounding effect of these two forces may lead to either excessive entry or foreclosure, and possibly to a fixed rebate for exclusivity given to all buyers.
Published: 2021
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4. Funding and financing infrastructure: the joint-use of public and private finance

Author: David Martimort, Marianne Fay, Stéphane Straub, Toulouse School of Economics (TSE), Université Toulouse 1 Capitole (UT1), and Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE)
Subjects: Finance, Economics and Econometrics, Infrastructure, business.industry, media_common.quotation_subject, Social cost, 05 social sciences, 1. No poverty, Subsidy, Private finance, Development, Service provider, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Information asymmetry, Bankruptcy, Service (economics), 0502 economics and business, Private finance initiative, 050207 economics, business, 050205 econometrics, media_common, Public finance, Regulation
Abstract: The paper addresses the issue of the feasible level of private finance in a contracting model of infrastructure finding and financing. It characterizes the structure of financial contracts, deriving the conditions under which both public and private finance coexist. A key feature is that access to outside finance and the regulatory decision on pricing and the amount of public subsidy, hence the extent of price recovery, are jointly determined. Mobilizing private finance requires a combination of price for the service and subsidy to the service provider that is large enough, exacerbating the fundamental tensions between financial viability through cost recovery and social inclusion. The paper then shows that the feasibility trade-off responds in non-trivial ways to changes in the economic and institutional environment likely to occur along the development path. While improvements along some of these dimensions, notably in the efficiency of bankruptcy procedures, appear to ease access to private finance, others, such as the cost of public funds, actually makes public finance more efficient. Using project data from the PPI database including information on the financial structure, the authors uncover an inverse U-shaped pattern in the share of private finance, peaking for countries in the upper-middle income range, which echoes their theoretical findings.
Published: 2021
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5. Controlling Sellers Who Provide Advice: Regulation and Competition*

Author: Jerome Pouyet, Denis Gromb, David Bardey, David Martimort, University of Los Andes, Ecole des Hautes Etudes Commerciales (HEC Paris), Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Paris Jourdan Sciences Economiques (PJSE), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Théorie économique, modélisation et applications (THEMA), CY Cergy Paris Université (CY)-Centre National de la Recherche Scientifique (CNRS), ESSEC Business School, and Essec Business School
Subjects: Economics and Econometrics, 05 social sciences, TheoryofComputation_GENERAL, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, General Business, Management and Accounting, Cone (formal languages), Competition (economics), Microeconomics, Incentive, Margin (finance), Accounting, 0502 economics and business, ComputingMilieux_COMPUTERSANDSOCIETY, Business, 050207 economics, Monopoly, Private information retrieval, Advice (complexity), 050205 econometrics
Abstract: International audience; A monopoly seller advising buyers about which of two goods fits their needs may be tempted to recommend the higher margin good. For the seller to collect information about a buyer’s needs and provide truthful advice, the profits from selling both goods must be similar enough, i.e., within an implementability cone. The optimal regulation controls pricing distortions and information‐collection incentives separately via price regulation and fixed rewards respectively. This no longer holds when the seller has private information about costs as both problems interact. We study whether competition and the threat by buyers to switch sellers can substitute for regulation.
Published: 2020
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6. Downstream mergers in vertically related markets with capacity constraints

Author: Jerome Pouyet, David Martimort, Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Paris Jourdan Sciences Economiques (PJSE), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), ESSEC Business School, Essec Business School, Théorie économique, modélisation et applications (THEMA), and Centre National de la Recherche Scientifique (CNRS)-CY Cergy Paris Université (CY)
Subjects: Upstream (petroleum industry), Economics and Econometrics, Mechanism design, Merger, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty, [QFIN]Quantitative Finance [q-fin], Strategy and Management, 05 social sciences, Economics, Econometrics and Finance (miscellaneous), [SHS]Humanities and Social Sciences, Downstream (manufacturing), Competition with capacity constraints, 0502 economics and business, Industrial relations, Business, JEL: L - Industrial Organization/L.L1 - Market Structure, Firm Strategy, and Market Performance, 050207 economics, Externality, Industrial organization, 050205 econometrics, Vertically related markets, JEL: D - Microeconomics/D.D4 - Market Structure, Pricing, and Design
Abstract: International audience; Motivated by a recent merger proposal in the French outdoor advertising market, we develop a model in which firms are initially endowed with some advertising capacities and compete on two fronts. First, firms compete to acquire additional advertising capacities on an upstream market; a first stage modeled as a second-price auction with externalities. Second, those firms, privately informed on their own costs, use their capacities on the downstream market to supply advertisers whose demand is random; a second stage modeled by means of mechanism design techniques. We study the linkages between the equilibrium outcomes on both markets. When a firm is endowed with more initial capacity, through the acquisition of a competitor for instance, whether it becomes more or less eager to acquire extra capacity on the upstream market depends a priori on fine details of the downstream market. Under reasonable choices of functional forms, we demonstrate that a downstream merger does not create any bias in the upstream market towards the already dominant firm. (C) 2020 Elsevier B.V. All rights reserved.
Published: 2020
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7. From Inefficient Behind-The-Border Policies to Inefficient Trade Agreements: A Two-Tier Asymmetric Information Model*

Author: David Laborde, Antoine Bouët, David Martimort, International Food Policy Research Institute [Washington] (IFPRI), Consultative Group on International Agricultural Research [CGIAR] (CGIAR), Groupe de Recherche en Economie Théorique et Appliquée (GREThA), Université de Bordeaux (UB)-Centre National de la Recherche Scientifique (CNRS), Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Paris Jourdan Sciences Economiques (PJSE), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), and Centre National de la Recherche Scientifique (CNRS)-Université de Bordeaux (UB)
Subjects: Economics and Econometrics, General equilibrium theory, Double-Edged Incentives, 05 social sciences, Behind-The-Border Policies, Tariff, Subsidy, Trade Negotiations, International economics, Tariff Equilibrium, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Trade agreement, Politics, Information asymmetry, 0502 economics and business, Economics, Asymmetric Information, JEL: F - International Economics/F.F1 - Trade/F.F1.F13 - Trade Policy • International Trade Organizations, 050207 economics, Private information retrieval, Free trade, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D82 - Asymmetric and Private Information • Mechanism Design, 050205 econometrics
Abstract: We consider a general equilibrium model of international trade with two layers of informational asymmetries. Private information of Home producers on costs affects the design of ‘behind-the-border’ policies reflecting the political influence of inefficient producers. Home's supply is contracted, causing trade, and motivating the use of tariffs. Eliminating those instruments by means of a trade agreement may become impossible once Home has also private information on its redistributive concerns. Home, when subject to strong influence by inefficient producers, might be reluctant to adopt free trade, which may lead to limited tariff cuts and give a role for export subsidies.
Published: 2020
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8. Use and abuse of regulated prices in electricity markets: 'How to regulate regulated prices?'

Author: Jerome Pouyet, Carine Staropoli, David Martimort, École des hautes études en sciences sociales (EHESS), Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Paris Jourdan Sciences Economiques (PJSE), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), ESSEC Business School, Essec Business School, Théorie économique, modélisation et applications (THEMA), Centre National de la Recherche Scientifique (CNRS)-CY Cergy Paris Université (CY), and Université Paris 1 Panthéon-Sorbonne (UP1)
Subjects: Economics and Econometrics, Government, [QFIN]Quantitative Finance [q-fin], business.industry, Strategy and Management, media_common.quotation_subject, 05 social sciences, International economics, Redistribution (cultural anthropology), Discretion, General Business, Management and Accounting, [SHS]Humanities and Social Sciences, Competition (economics), restrict, Management of Technology and Innovation, 0502 economics and business, Electricity, 050207 economics, Market share, business, Monopoly, 050205 econometrics, media_common
Abstract: International audience; We consider the regulation of the tariffs charged by a public utility in the electricity sector. Consumers differ in terms of their privately known demands. When regulating a firm's tariffs, the government is concerned by the redistribution across consumer classes. A conflict between redistribution and screening induces pricing distortions when the firm is a monopoly. Introducing competition with an unregulated fringe improves efficiency but jeopardizes redistribution. In response to this problem, the government may now want to manipulate information about the incumbent's cost to restrict entry and better promote its own redistributive objective. To prevent such obstacle to entry, the government's discretion in fixing the incumbent's regulated tariffs should be restricted by imposing floors or caps on those tariffs and/or by controlling the market share left to the competitive fringe. We highlight the determinants of such limits on discretion and unveil to what extent they depend on the government's redistributive concerns.
Published: 2020
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9. Une revue critique de la théorie de l’agence commune appliquée aux jeux de lobbies

Author: David Martimort, Paris School of Economics (PSE), Paris Jourdan Sciences Economiques (PJSE), Université Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris), and Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE)
Subjects: 0502 economics and business, 05 social sciences, 050207 economics, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, General Economics, Econometrics and Finance, ComputingMilieux_MISCELLANEOUS, 050205 econometrics
Abstract: L’objet de cet article est de remettre en question la vision optimiste du jeu politique entre groupes de pression qui est offerte par la theorie de l’agence commune. Si l’on croit les lecons de cette theorie, le processus de concurrence entre groupes de pression conduit a des choix equilibres ; une vision associee au mouvement du pluralistic politics dont l’etendard fut porte par Dahl [1963]. Si le paradigme de l’agence commune est renouvele par la prise en consideration des problemes informationnels a l’interieur des groupes d’interet ou entre ces derniers et le decideur politique, les inefficacites organisationnelles auxquelles font face les groupes diffusent dans tout le processus politique qui, lui aussi, finit par etre inefficace. Cet article decrit le type de couts de transaction qui pesent alors sur ce processus.
Published: 2018

10. Extracting information or resource? The Hotelling rule revisited under asymmetric information

Author: Francesco Ricci, David Martimort, Jerome Pouyet, Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Paris Jourdan Sciences Economiques (PJSE), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Théorie économique, modélisation et applications (THEMA), Université de Cergy Pontoise (UCP), Université Paris-Seine-Université Paris-Seine-Centre National de la Recherche Scientifique (CNRS), Acteurs, Ressources et Territoires dans le Développement (UMR ART-Dev), Centre National de la Recherche Scientifique (CNRS)-Université de Montpellier (UM)-Université Paul-Valéry - Montpellier 3 (UPVM)-Université de Perpignan Via Domitia (UPVD)-Centre de Coopération Internationale en Recherche Agronomique pour le Développement (Cirad), Centre de Coopération Internationale en Recherche Agronomique pour le Développement (Cirad)-Université Paul-Valéry - Montpellier 3 (UPVM)-Université de Perpignan Via Domitia (UPVD)-Université de Montpellier (UM)-Centre National de la Recherche Scientifique (CNRS), Université Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Centre National de la Recherche Scientifique (CNRS)-Université de Montpellier (UM)-Université Paul-Valéry - Montpellier 3 (UM3)-Université de Perpignan Via Domitia (UPVD)-Centre de Coopération Internationale en Recherche Agronomique pour le Développement (Cirad), and Centre National de la Recherche Scientifique (CNRS)-Centre de Coopération Internationale en Recherche Agronomique pour le Développement (Cirad)-Université de Montpellier (UM)-Université de Perpignan Via Domitia (UPVD)-Université Paul-Valéry - Montpellier 3 (UPVM)
Subjects: Economics and Econometrics, Delegated Management, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D86 - Economics of Contract: Theory, 05 social sciences, Optimal, JEL: Q - Agricultural and Natural Resource Economics • Environmental and Ecological Economics/Q.Q3 - Nonrenewable Resources and Conservation/Q.Q3.Q38 - Government Policy, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Microeconomics, Incentive, Information asymmetry, Complete information, 0502 economics and business, Market price, Economics, Asymmetric Information, 050207 economics, Contract, License, Private information retrieval, Stock (geology), Non-renewable resource, ComputingMilieux_MISCELLANEOUS, 050205 econometrics, Non-Renewable resource
Abstract: We characterize the optimal extraction path when a concessionaire has private information on the initial stock of resource. Under asymmetric information, a `virtual Hotelling rule' describes how the resource price evolves over time and how extraction costs are compounded with information costs along an optimal extraction path. In sharp contrast with the case of complete information, elds which are heterogeneous in terms of their initial stocks follow di erent extraction paths. Some resource might be left unexploited in the long-run as a way to foster incentives. The optimal contract may sometimes be implemented through royalties and license fees. With a market of concessionaires, asymmetric information leads to a `virtual Her ndahl principle' and to a new form of heterogeneity across active concessionaires. Under asymmetric information, the market price converges faster to its long-run limit, exhibiting more stability.
Published: 2018
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11. HOW TO DESIGN INFRASTRUCTURE CONTRACTS IN A WARMING WORLD: A CRITICAL APPRAISAL OF PUBLIC-PRIVATE PARTNERSHIPS*

Author: Stéphane Straub and David Martimort
Subjects: Flexibility (engineering), Economics and Econometrics, Limited liability, Moral hazard, 05 social sciences, Agency cost, Context (language use), Option value, Microeconomics, 13. Climate action, 0502 economics and business, Economics, 050206 economic theory, 050207 economics, Unbundling, Productivity
Abstract: We analyze how long-term uncertainty, for example, regarding future climate conditions, affects the design of concession contracts and organizational forms in a principal–agent context, with dynamic moral hazard, limited liability, and irreversibility constraints. The prospect of future, uncertain productivity shocks on the returns on the firm's effort creates an option value of delaying efforts, a course that exacerbates agency costs. Contracts and organizational forms are drafted to control this cost of delegated flexibility. The possibility for the agent to delay investment in response to uncertainty and irreversibility also elicits preference for unbundling different stages of the project through short-term contracts. Our analysis is relevant to infrastructure sectors that are sensitive to changing weather conditions and sheds a pessimistic light on the relevance of public–private partnerships in this context.
Published: 2016
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12. A MECHANISM DESIGN APPROACH TO CLIMATE-CHANGE AGREEMENTS

Author: David Martimort and Wilfried Sand-Zantman
Subjects: Mechanism design, 05 social sciences, Optimal mechanism, 16. Peace & justice, Microeconomics, Free rider problem, 13. Climate action, Incentive compatibility, 0502 economics and business, Economics, 050202 agricultural economics & policy, 050207 economics, Enforcement, Robustness (economics), General Economics, Econometrics and Finance, Industrial organization, Mechanism (sociology), Externality
Abstract: We take a mechanism design perspective to investigate how environmental agreements should account for multilateral externalities, incentive compatibility, and voluntary participation by sovereign countries. The optimal mechanism involves a tradeoff between a free rider problem in the effort provision of participating countries and the necessity of inducing countries to ratify the agreement. This mechanism can be approximated by a simple menu with attractive implementation and robustness properties. Limits on enforcement and commitment might nevertheless hinder the performance of this menu, making the “business as usual” scenario more likely.
Published: 2015
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13. Contract Theory in the Spotlight: Oliver Hart and Bengt Holmström, 2016 Nobel Prize Winners

Author: Pierre Fleckinger, David Martimort, Centre d'économie de la Sorbonne (CES), Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS), Centre d'économie industrielle i3 (CERNA i3), MINES ParisTech - École nationale supérieure des mines de Paris, Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Centre National de la Recherche Scientifique (CNRS), Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Paris Jourdan Sciences Economiques (PJSE), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Université Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS), Centre National de la Recherche Scientifique (CNRS)-PSL Research University (PSL)-MINES ParisTech - École nationale supérieure des mines de Paris, and Université Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)
Subjects: 05 social sciences, Contract theory, 16. Peace & justice, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Incomplete contracts, Political science, 0502 economics and business, Political Science and International Relations, Incentives, 050207 economics, Moral hazard, Humanities, 050203 business & management
Abstract: Oliver Hart et Bengt Holmstrom ont recu le Prix de la Banque de Suede en sciences economiques en memoire d’Alfred Nobel pour leurs contributions a la Theorie des Contrats. Leurs travaux etablissent une Theorie de la Firme et des organisations fondee sur deux piliers. (1) Les parties contractantes exercent des efforts ou accomplissent des investissements qui accroissent la valeur de leur relation, mais ces actions sont parfois cachees, ne peuvent etre directement observees, et ne peuvent donc pas etre specifiees dans des contrats mise en œuvre par des cours de justice. (2) Les contrats et les structures de proprietes sont des reponses (imparfaites) a ces frictions informationnelles. Les contributions de ces auteurs ont ainsi conjointement ouvert la voie a un renouvellement complet de la Theorie de la Firme et de la Theorie des Organisations.
Published: 2018
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14. A complete characterization of equilibria in an intrinsic common agency screening game

Author: Lars Stole, David Martimort, Aggey Semenov, Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Paris Jourdan Sciences Economiques (PJSE), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), University of Ottawa [Ottawa], Booth School of Business [Chicago], University of Chicago, Université Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), and University of Ottawa [Ottawa] (uOttawa)
Subjects: TheoryofComputation_MISCELLANEOUS, equilibrium selection, Computer Science::Computer Science and Game Theory, mechanism design for delegated decision-making, Duality (mathematics), Pooling, Interval (mathematics), 0502 economics and business, ddc:330, 050207 economics, Distortion (economics), aggregate games, Mathematics, Mechanism design, Intrinsic common agency, 05 social sciences, TheoryofComputation_GENERAL, Screening game, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, D82, Equilibrium selection, Choice function, duality, 050206 economic theory, General Economics, Econometrics and Finance, Mathematical economics, D86
Abstract: International audience; We characterize the complete set of equilibrium allocations to an intrinsic common agency screening game as the set of solutions to self-generating optimization programs. We provide a complete characterization of equilibrium outcomes for regular environments by relying on techniques developed elsewhere for aggregate games and for the mechanism design delegation literature. The set of equilibria include those with non-differentiable payoffs and discontinuous choices, as well as equilibria that are smooth and continuous in types. We identify one equilibrium, the maximal equilibrium, which is the unique solution to a self-generating optimization program with the largest (or ``maximal'') domain, and the only equilibrium that is supported with bi-conjugate (i.e., least-concave) tariffs. The maximal equilibrium exhibits a n-fold distortion caused by each of the n principal's non-cooperative behavior in over-harvesting the agent's information rent. Furthermore, in any equilibrium, over any interval of types in which there is full separation, the agent's equilibrium action corresponds to the allocation in the maximal equilibrium. Under reasonable conditions, the maximal equilibrium maximizes the agent's information rent within the class of equilibrium allocations. When the principals' most-preferred equilibrium allocation differs from the maximal equilibrium, we demonstrate that the agent's choice function exhibits an interval of bunching over the worst agent types, and elsewhere corresponds with the maximal allocation. The optimal region of bunching trades off the principals' desire to constrain inefficient n-fold marginalizations of the agent's rent against the inefficiency of pooling agent types.
Published: 2018
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15. Optimal stationary contract with two-sided imperfect enforcement and persistent adverse selection

Author: David Martimort, Aggey Semenov, Lars Stole, Paris School of Economics (PSE), Paris Jourdan Sciences Economiques (PJSE), Université Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), University of Ottawa [Ottawa] (uOttawa), Booth School of Business [Chicago], University of Chicago, École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), and University of Ottawa [Ottawa]
Subjects: Economics and Econometrics, Contract enforcement, media_common.quotation_subject, Adverse selection, Contract management, ComputingMilieux_LEGALASPECTSOFCOMPUTING, 0502 economics and business, 050207 economics, Enforcement, Private information retrieval, 050205 econometrics, media_common, Actuarial science, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D86 - Economics of Contract: Theory, 05 social sciences, Optimal control, Payment, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Stationary contract, 8. Economic growth, Imperfect, Business, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D82 - Asymmetric and Private Information • Mechanism Design, Finance
Abstract: International audience; We consider an infinitely-repeated principal–agent relationship run with stationary contracts. The agent has private information on his persistent cost parameter and, under limited enforcement, both parties can breach the contract. The optimal stationary contract with limited enforcement is made of two distinct pieces. For the most efficient types of the agent, the contract entails bunching with a fixed payment and a fixed output. For less efficient types, the contract exhibits downward output distortions below the Baron–Myerson level that would have been achieved had enforcement been costless.
Published: 2017
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16. Delegation, Ownership Concentration and R&D Spending: Evidence From Italy

Author: Salvatore Piccolo, David Martimort, and Jakub Kastl
Subjects: Economics and Econometrics, Labour economics, 050208 finance, Delegate, Delegation, business.industry, media_common.quotation_subject, 05 social sciences, Positive correlation, General Business, Management and Accounting, Human capital, Economy, Accounting, Manufacturing, 8. Economic growth, 0502 economics and business, Capital intensity, Business, 050207 economics, media_common
Abstract: We use data from the Italian manufacturing industry to document a positive correlation between delegation and R&D. This result is robust to controlling for the determinants of R&D such as human capital, capital intensity and sectoral or regional effects. We further investigate the determinants of delegation and find that ownership concentration is significantly related to delegation. Among large firms with a dispersed ownership structure, larger ownership concentration implies less delegation, whereas the opposite emerges with more concentrated ownership. Differences between the Northern and Southern regions in terms of firms' propensity to delegate decisions and engage in R&D also emerge.
Published: 2013
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17. Dynamic Procurement under Uncertainty: Optimal Design and Implications for Incomplete Contracts

Author: Malin Arve, David Martimort, Norwegian School of Economics and Business Administration, Paris Jourdan Sciences Economiques (PJSE), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), and Université Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)
Subjects: Optimal design, Service (business), Economics and Econometrics, 05 social sciences, Contract management, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Dynamic Contract, Microeconomics, Procurement, 8. Economic growth, 0502 economics and business, Goodwill, Value (economics), Economics, Incomplete contracts, 050207 economics, Basic service, 050205 econometrics
Abstract: We characterize the optimal dynamic contract for a long-term basic service when an uncertain add-on is required later on. Introducing firm risk aversion has two impacts. Profits for the basic service can be backloaded to induce cheaper information revelation for this service: an Income Effect which reduces output distortions. The firm must also bear some risk to induce information revelation for the add-on. This Risk Effect reduces the level of the add-on but hardens information revelation for the basic service. The interaction between these effects has important implications for the dynamics of distortions, contract renegotiation, and the value of incomplete contracts. (JEL D47, D81, D86)
Published: 2016
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18. How much discretion for risk regulators?

Author: Yolande Hiriart and David Martimort
Subjects: Finance, Economics and Econometrics, Public economics, business.industry, media_common.quotation_subject, 05 social sciences, Discretion, 0506 political science, Accident (fallacy), Politics, Potential harm, 0502 economics and business, Agency (sociology), 050602 political science & public administration, Economics, 050207 economics, business, media_common
Abstract: We analyze the regulation of firms that undertake socially risky activities but can reduce the probability of an accident inflicted on third parties by carrying out non verifiable effort. Congress delegates regulation to an agency, although these two bodies may have different preferences toward the industry. The optimal level of discretion left to the agency results from the following trade-off: the agency can tailor discretionary policies to its expert knowledge about potential harm, but it implements policies that are too "pro-industry." The agency should be given full discretion when the firm is solvent; partial discretion is preferred otherwise. We then investigate how this trade-off changes as the political and economic landscapes are modified.
Published: 2012
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19. CONTRACTING FOR AN INNOVATION UNDER BILATERAL ASYMMETRIC INFORMATION*

Author: Wilfried Sand-Zantman, Jean-Christophe Poudou, and David Martimort
Subjects: Value (ethics), Economics and Econometrics, media_common.quotation_subject, 05 social sciences, ComputingMilieux_LEGALASPECTSOFCOMPUTING, Intellectual property, General Business, Management and Accounting, Incentive, Information asymmetry, Property rights, Accounting, 0502 economics and business, Quality (business), Business, 050207 economics, Industrial organization, 050205 econometrics, media_common
Abstract: We analyze licensing contracts between informed innovators and developers exerting profit-increasing effort. Those contracts must simultaneously induce innovators to convey information on the value of their ideas, while inducing developers to exert effort and protecting the innovators' intellectual property rights. We show that the best innovators signal themselves by taking more royalties even if it reduces the developers' share of returns and their incentives. Moreover, royalties are more likely to be used when property rights are easy to enforce and pre-contractual evidence on innovation quality is hard to produce.
Published: 2010
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20. The Strategic Value of Quantity Forcing Contracts

Author: David Martimort, Salvatore Piccolo, Toulouse School of Economics (TSE), École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées, and Université de Naples
Subjects: Moral hazard, JEL: L - Industrial Organization/L.L1 - Market Structure, Firm Strategy, and Market Performance/L.L1.L14 - Transactional Relationships • Contracts and Reputation • Networks, jel:D82, Adverse selection, jel:D86, Strategic Value, Microeconomics, Competition (economics), 0502 economics and business, Economics, Incomplete contracts, 050207 economics, Settore SECS-P/01 - Economia Politica, B- ECONOMIE ET FINANCE, Industrial organization, 050205 econometrics, Downstream (petroleum industry), Forcing (recursion theory), business.industry, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D86 - Economics of Contract: Theory, 05 social sciences, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Value (economics), jel:L14, business, General Economics, Econometrics and Finance, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D82 - Asymmetric and Private Information • Mechanism Design
Abstract: We explore the strategic value of quantity forcing contracts in a manufacturer-retailer environment under both adverse selection and moral hazard. Manufacturers dealing with (exclusive) competing retailers may prefer to leave contracts silent on retail prices, whenever other aspects of the retailers' activity remain nonverifiable. Two effects are at play when moving from retail price maintenance to quantity forcing. First, restricting screening possibilities may increase retailers' rent. Second, such a restriction affects downstream competition. This latter effect may justify using quantity forcing contracts and, more generally, shed light on a novel source of contractual incompleteness. (JEL D82, D86, L14)
Published: 2010
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21. Merger Guidelines for Bidding Markets

Author: David Martimort, Philippe Gagnepain, Centre d'économie de la Sorbonne (CES), Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS), Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Paris-Jourdan Sciences Economiques (PSE), École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Ce travail a bénéficié d'une aide de l'Etat gérée par l'Agence Nationale de la Recherche au titre du programme « Investissements d'avenir » portant la référence ANR-10-LABX-93-01.This work was supported by the French National Research Agency, through the program Investissements d'Avenir, ANR-10--LABX_93-01., Université Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS), and École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)
Subjects: 05 social sciences, ComputingMilieux_PERSONALCOMPUTING, Context (language use), Economic surplus, Bidding, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Merger guidelines, Microeconomics, Competition (economics), 11. Sustainability, 0502 economics and business, Optimal allocation, Single equation, Economics, transports publics urbains, 050207 economics, General Economics, Econometrics and Finance, Industrial organization, 050205 econometrics
Abstract: International audience; We propose merger guidelines for bidding markets through the construction of a simple test. It is applied in the particular context of the French urban transport industry. It designs the optimal auction and captures two opposite forces at stake: on the one hand, the optimal auction is biased against a merger due to a loss of competition; on the other hand, potential efficiency gains bias the optimal allocation towards the merger firm. The two effects can be nested in a single equation condition which determines whether the merger improves the consumer net surplus. We suggest that the merger between Transdev and Veolia is consumer surplus improving if the efficiency gains from the merger allow both firms to decrease their initial costs inability by at least 17.9% and 17.8% respectively.
Published: 2016
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22. Corruption in PPPs, incentives and contract incompleteness

Author: Elisabetta Iossa, David Martimort, University of Rome 'Tor Vergeta', Center for Economic Policy Research (CEPR), CEPR, Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Paris-Jourdan Sciences Economiques (PSE), École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Ce travail a bénéficié d'une aide de l'Etat gérée par l'Agence Nationale de la Recherche au titre du programme « Investissements d'avenir » portant la référence ANR-10-LABX-93-01.This work was supported by the French National Research Agency, through the program Investissements d'Avenir, ANR-10--LABX_93-01., and École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)
Subjects: DISCRETION, Strategy and Management, jel:D82, Economics, Econometrics and Finance (miscellaneous), 0211 other engineering and technologies, Public–private partnerships, ComputingMilieux_LEGALASPECTSOFCOMPUTING, 02 engineering and technology, DELEGATION, Corruption, Incomplete Contracts, Moral Hazard, Principal-Agent-Supervisor Model, Public-Private Partnerships, Risk Allocation, DESIGN, TRANSACTION COSTS, 021105 building & construction, Principal–agent–supervisor model, 050207 economics, Settore SECS-P/01 - Economia Politica, Private information retrieval, 050205 econometrics, media_common, Delegation, 05 social sciences, JEL: D - Microeconomics/D.D2 - Production and Organizations/D.D2.D23 - Organizational Behavior • Transaction Costs • Property Rights, PUBLIC-PRIVATE PARTNERSHIPS, 16. Peace & justice, Discretion, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, jel:L33, PROCUREMENT, JEL: L - Industrial Organization/L.L3 - Nonprofit Organizations and Public Enterprise/L.L3.L33 - Comparison of Public and Private Enterprises and Nonprofit Institutions • Privatization • Contracting Out, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D82 - Asymmetric and Private Information • Mechanism Design, PRINCIPAL-AGENT-SUPERVISOR MODEL, Economics and Econometrics, EFFICIENCY, Moral hazard, Corruption, media_common.quotation_subject, Agency cost, Principal–agent problem, CORRUPTION, INCOMPLETE CONTRACTS, MORAL HAZARD, PRINCIPAL-AGENT-SUPERVISOR MODEL, PUBLIC-PRIVATE PARTNERSHIPS, RISK ALLOCATION, PUBLIC-PRIVATE PARTNERSHIPS, PRINCIPAL-AGENT PROBLEMS, TRANSACTION COSTS, MORAL HAZARD, DESIGN, PROCUREMENT, EFFICIENCY, DELEGATION, DISCRETION, TRANSFERS, jel:D23, jel:K42, PRINCIPAL-AGENT PROBLEMS, TRANSFERS, 0502 economics and business, Incomplete contracts, JEL: K - Law and Economics/K.K4 - Legal Procedure, the Legal System, and Illegal Behavior/K.K4.K42 - Illegal Behavior and the Enforcement of Law, Finance, business.industry, Corruption Incomplete contracts Moral hazard Principal–agent–supervisor model Public–private partnerships Risk allocation, Risk allocation, Industrial relations, Business
Abstract: International audience; We analyze risk allocation and contractual choices when public procurement is plagued with moral hazard, private information on exogenous shocks, and threat of corruption. Complete contracts entail state-contingent clauses that compensate the contractor for shocks unrelated to his own effort. By improving insurance, those contracts reduce the agency cost of moral hazard. When the contractor has private information on revenues shocks, verifying messages on shocks realizations is costly. Incomplete contracts do not specify state-contingent clauses, thereby saving on verifiability costs. This makes incomplete contracts attractive even though they entail greater agency costs. Because of private information on contracting costs, a public official may have discretion to choose whether to procure under a complete or an incomplete contract. When the public official is corrupt, such delegation results in incomplete contracts being chosen too often. Empirical predictions on the use of incomplete contracts and policy implications on the benefits of standardized contracts are discussed.
Published: 2016
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23. Solving the global warming problem: beyond markets, simple mechanisms may help!

Author: Wilfried Sand-Zantman, David Martimort, Paris-Jourdan Sciences Economiques (PSE), École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Groupe de recherche en économie mathématique et quantitative (GREMAQ), Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS), Toulouse School of Economics (TSE), École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées, Institut d'Economie Industrielle (IDEI), Ce travail a bénéficié d'une aide de l'Etat gérée par l'Agence Nationale de la Recherche au titre du programme ' Investissements d'avenir ' portant la référence ANR-10-LABX-93-01. This work was supported by the French National Research Agency, through the program Investissements d'Avenir, ANR-10--LABX-93-01., École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Université Toulouse 1 Capitole (UT1), Institut d'économie industrielle (IDEI), and Centre National de la Recherche Scientifique (CNRS)-École des Ponts ParisTech (ENPC)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-École normale supérieure - Paris (ENS Paris)
Subjects: Economics and Econometrics, International environmental agreements, Public economics, 05 social sciences, Global warming, Context (language use), [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Free riding, Incentive, Information asymmetry, Sovereignty, 13. Climate action, 0502 economics and business, Economics, 050207 economics, Construct (philosophy), Externality, 050205 econometrics
Abstract: his paper discusses the feasibility and performances of simple mechanisms to implement international environmental agreements in the multilateral externalities context of global warming. Asymmetric information and voluntary participation by sovereign and heterogeneous countries are key constraints on the design of those agreements. Mechanisms must prevent two sorts of free-riding problems - free riding in effort provision and free riding in participation. As markets might fail to solve simultaneously those two problems, we construct instead a simple menu of options that trades off the provision of incentives for participating countries and the provision of incentives to participate. With such a mechanism, all countries voluntarily contribute to a fund, although at different intensities, but only the most efficient ones effectively reduce their pollution below its 'business as usual' level.
Published: 2013
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24. [La nature multiprincipal du gouvernement]

Author: David Martimort, Station d'économie et sociologie rurales, Institut National de la Recherche Agronomique (INRA), and ProdInra, Migration
Subjects: Economics and Econometrics, Government, Process (engineering), 05 social sciences, Control (management), [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Microeconomics, Incentive, 0502 economics and business, Economics, 050207 economics, [SHS.ECO] Humanities and Social Sciences/Economics and Finance, Set (psychology), Finance, Industrial organization, 050205 econometrics
Abstract: Egalement paru dans : INRA-ESR Toulouse Série D ; 95-10D; Un des outils théoriques requis pour ouvrir la "boite noire" de l'organisation interne du gouvernement est la théorie des multiprincipaux qui étudie comment différents schémas incitatifs interagissent. En considérant l'ensemble des relations entre les centres de gouvernement et les entités qu'ils régulent comme un ensemble de contrats concurrents, on peut rechercher les coûts et les bénéfices d'une séparation structurelle entre différentes régulations partageant les droits de contrôle sur le processus régulatoire. Tout d'abord, cet article survole la littérature ayant abordé ce sujet. Puis, il décrit plus largement les bénéfices possibles de cette séparation dans un monde de régulateurs non bienveillants. Il discute aussi comment les droits de contrôle sur le processus régulatoire et les canaux de communication à l'intérieur du gouvernement doivent être construits dans le même but : réduire la discrétion des régulateurs non bienveillants.
Published: 1996
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25. Representing equilibrium aggregates in aggregate games with applications to common agency

Author: David Martimort, Lars Stole, Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Paris-Jourdan Sciences Economiques (PSE), École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Booth School of Business [Chicago], University of Chicago, Ce travail a bénéficié d'une aide de l'Etat gérée par l'Agence Nationale de la Recherche au titre du programme ' Investissements d'avenir ' portant la référence ANR-10-LABX-93-01. This work was supported by the French National Research Agency, through the program Investissements d'Avenir, ANR-10--LABX-93-01., and École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)
Subjects: TheoryofComputation_MISCELLANEOUS, Economics and Econometrics, Sequential equilibrium, Computer Science::Computer Science and Game Theory, Symmetric game, 05 social sciences, Symmetric equilibrium, ComputingMilieux_PERSONALCOMPUTING, TheoryofComputation_GENERAL, Aggregate games, Supply-function games, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Example of a game without a value, Equilibrium selection, Best response, Common agency games, 0502 economics and business, Economics, Repeated game, Epsilon-equilibrium, 050207 economics, Mathematical economics, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D82 - Asymmetric and Private Information • Mechanism Design, Finance, 050205 econometrics
Abstract: International audience; An aggregate game is a normal-form game with the property that each playerʼs payoff is a function of only his own strategy and an aggregate of the strategy profile of all players. Such games possess properties that can often yield simple characterizations of equilibrium aggregates without requiring that one solves for the equilibrium strategy profile. When payoffs have a quasi-linear structure and a degree of symmetry, we construct a self-generating maximization program over the space of aggregates with the property that the solution set corresponds to the set of equilibrium aggregates of the original n-player game. We illustrate the value of this approach in common-agency games where the playersʼ strategy space is an infinite-dimensional space of nonlinear contracts. We derive equilibrium existence and characterization theorems for both the adverse selection and moral hazard versions of these games.
Published: 2012
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26. Optimal domestic regulation under asymmetric information and international trade: a simple general equilibrium approach

Author: David Martimort, Thierry Verdier, Paris-Jourdan Sciences Economiques (PSE), École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Center for Economic Policy Research (CEPR), CEPR, Ce travail a bénéficié d'une aide de l'Etat gérée par l'Agence Nationale de la Recherche au titre du programme ' Investissements d'avenir ' portant la référence ANR-10-LABX-93-01. This work was supported by the French National Research Agency, through the program Investissements d'Avenir, ANR-10--LABX-93-01., and École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)
Subjects: Economics and Econometrics, General equilibrium theory, business.industry, 05 social sciences, Small open economy, International trade, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Information asymmetry, Incentive, 8. Economic growth, 0502 economics and business, Openness to experience, Economics, 050207 economics, Autarky, Trade barrier, business, Free trade, 050205 econometrics
Abstract: International audience; We investigate the design of domestic incentive regulations in a small economy opened to trade and its implications for international specialization and for trade openness to remain welfare-improving. More specifically, we append to an otherwise standard 2 × 2 Heckscher-Ohlin model of a small open economy a continuum of intermediate sectors producing nontradable goods used in tradable sectors. Those goods are produced by privately informed regulated firms. Asymmetric information induces distortions with general equilibrium impacts. The small economy becomes relatively richer in the informationally sensitive factor so that asymmetric information might reverse trade patterns. Free trade is Pareto-dominated by autarky when it exacerbates agency distortions.
Published: 2012
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27. Optimal Delegation with Multi-dimensional Decisions

Author: Frédéric Koessler, David Martimort, Paris-Jourdan Sciences Economiques (PSE), École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Ce travail a bénéficié d'une aide de l'Etat gérée par l'Agence Nationale de la Recherche au titre du programme ' Investissements d'avenir ' portant la référence ANR-10-LABX-93-01. This work was supported by the French National Research Agency, through the program Investissements d'Avenir, ANR-10--LABX-93-01., and Centre National de la Recherche Scientifique (CNRS)-École des Ponts ParisTech (ENPC)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-École normale supérieure - Paris (ENS Paris)
Subjects: Economics and Econometrics, Mechanism design, Ideal (set theory), Delegation, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D86 - Economics of Contract: Theory, media_common.quotation_subject, 05 social sciences, Pooling, Optimal mechanism, Principal (computer security), Discretion, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Microeconomics, 0502 economics and business, Economics, Multi-dimensional decision, Mechanism, 050207 economics, Dimension (data warehouse), Mathematical economics, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D82 - Asymmetric and Private Information • Mechanism Design, 050205 econometrics, media_common
Abstract: This paper investigates optimal mechanisms in a principal-agent framework with a two-dimensional decision space, quadratic payoffs and no monetary transfers. If the conflicts of interest between the principal and the agent are different on each dimension, then delegation is always strictly valuable. The principal can better extract information from the agent by using the spread between the two decisions as a costly screening device. Delegation sets no longer trade off pooling intervals and intervals of full discretion but instead take more complex shapes. We use advanced results from the calculus of variations to ensure existence of a solution and derive sufficient and necessary conditions for optimality. The optimal mechanism is continuous and deterministic. The agentʼs informational rent, the average decision and its spread are strictly monotonic in the agentʼs type. The comparison of the optimal mechanism with standard one-dimensional mechanisms shows how cooperation between different principals controlling various dimensions of the agentʼs activities facilitates information revelation.
Published: 2012
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28. Risk allocation and the costs and benefits of public--private partnerships

Author: David Martimort, Elisabetta Iossa, Center for Economic Policy Research (CEPR), CEPR, Università degli Studi di Roma Tor Vergata [Roma], Paris-Jourdan Sciences Economiques (PSE), École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Ce travail a bénéficié d'une aide de l'Etat gérée par l'Agence Nationale de la Recherche au titre du programme ' Investissements d'avenir ' portant la référence ANR-10-LABX-93-01. This work was supported by the French National Research Agency, through the program Investissements d'Avenir, ANR-10--LABX-93-01., and École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)
Subjects: Economics and Econometrics, public private partnerships, Moral hazard, incentives, Agency cost, ownership, cooperation, Context (language use), alliances, information, public services, Information asymmetry, 0502 economics and business, Economics, 050207 economics, Settore SECS-P/01 - Economia Politica, incentive contracts, moral hazard, privatization, agency, organization, delegation, Finance, business.industry, 05 social sciences, Private sector, Diseconomies of scale, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Public service, Unbundling, business, 050203 business & management
Abstract: We study the agency costs of delegated public service provision, focusing on the link between organizational forms and uncertainty at project implementation. We consider a dynamic multitask moral hazard environment where the mapping between effort and performance is ex ante uncertain but new information may come along during operations. Our analysis points out at the efficiency gains that bundling planning and implementation - as under Public Private Partnerships - can bring in terms of better project design and lower operational costs. Bundling also results in increasingly better performance as uncertainty is reduced by growing experience in the sector. Bundling should instead be viewed with caution when the private sector seeks to radically innovate on public service provision or to introduce new services but lacks the knowledge and expertise to anticipate the impact of the innovative design/procedure/technology on the cost of operations. The compounding of asymmetric information ex post plus moral hazard and renegotiation may generate diseconomies of scope in agency costs which, for high operational risk, can make unbundling optimal. In this context, the use of private finance can help re-establishing the benefit of bundling only if lenders have sufficient expertise to help assessing project risks.
Published: 2012
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29. Empirical Evidence on Satisfaction with Privatization in Latin America

Author: David Martimort, Céline Bonnet, Pierre Dubois, Stéphane Straub, Toulouse School of Economics (TSE), Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS), Groupe de recherche en économie mathématique et quantitative (GREMAQ), Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées, Institut d'Economie Industrielle (IDEI), Arqade, Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1), Paris-Jourdan Sciences Economiques (PSE), École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Ce travail a bénéficié d'une aide de l'Etat gérée par l'Agence Nationale de la Recherche au titre du programme ' Investissements d'avenir ' portant la référence ANR-10-LABX-93-01. This work was supported by the French National Research Agency, through the program Investissements d'Avenir, ANR-10--LABX-93-01., École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1), Institut d'économie industrielle (IDEI), École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1), École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), and Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1)
Subjects: Macroeconomics, Economics and Econometrics, democracy, media_common.quotation_subject, income distribution, corruption, Developing country, Development, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D83 - Search • Learning • Information and Knowledge • Communication • Belief • Unawareness, public services, Income distribution, Accounting, 0502 economics and business, Development economics, Economics, profitability, 050207 economics, 10. No inequality, Empirical evidence, laws, 050205 econometrics, media_common, transparency, Political risk, corrupt, 05 social sciences, media, 1. No poverty, patronage, perception of corruption, Country risk, assets, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Privatization, judicial system, scandal, Ajoutez un mot-clé, 8. Economic growth, employment, transport, JEL: L - Industrial Organization/L.L3 - Nonprofit Organizations and Public Enterprise/L.L3.L33 - Comparison of Public and Private Enterprises and Nonprofit Institutions • Privatization • Contracting Out, Survey data collection, Public service, basic services, Crime, confidence, Welfare, Finance
Abstract: Since the 1980s, privatization of formerly state-owned firms has been extensively implemented by governments across Latin America. Despite the fact that most evaluations of the process fail to find significant adverse efficiency and welfare effects, there has been a strong surge in public discontent with such policy in the region. This paper performs a systematic empirical analysis of the determinants of such dissatisfaction, using survey data from Latinobarometro covering 17 countries over the period 1998-2008, complemented by country level data on macroeconomic, political, and institutional aspects as well as data on privatization. Dissatisfaction appears to respond to absolute and relative welfare effects, and we find a robust U-shaped effect in term of education and income levels, with individuals in the middle of such distributions being more critical with the outcome of privatizations. Copyright 2012, Oxford University Press.
Published: 2012
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30. Weak Enforcement of Environmental Policies: A Tale of Limited Commitment and Limited Fines

Author: David Martimort, Yolande Hiriart, Jerome Pouyet, Toulouse School of Economics (TSE), École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1), Institut d'économie industrielle (IDEI), Université Toulouse 1 Capitole (UT1), Economie des Ressources Naturelles (LERNA), Université Toulouse 1 Capitole (UT1)-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), Groupe de recherche en économie mathématique et quantitative (GREMAQ), Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Université Toulouse 1 Capitole (UT1), Paris-Jourdan Sciences Economiques (PSE), École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Paris School of Economics (PSE), Toulouse School of Economics (TSE-R), Université Toulouse Capitole (UT Capitole), Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS), Institut d'Economie Industrielle (IDEI), Université de Toulouse (UT)-Université de Toulouse (UT), Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), École normale supérieure - Paris (ENS-PSL), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS-PSL), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Centre National de la Recherche Scientifique (CNRS)-École des Ponts ParisTech (ENPC)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-École normale supérieure - Paris (ENS Paris), Bauer, Caroline, Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées, Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), École normale supérieure - Paris (ENS Paris), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), and Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE)
Subjects: Statistics and Probability, Economics and Econometrics, Adverse selection, JEL: L - Industrial Organization/L.L5 - Regulation and Industrial Policy/L.L5.L51 - Economics of Regulation, 05 social sciences, Fines, Commit, Government failure, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Microeconomics, Incentive, Information asymmetry, Risk regulation, Complete information, 0502 economics and business, Agency (sociology), Economics, 050207 economics, Statistics, Probability and Uncertainty, Moral hazard, Enforcement, [SHS.ECO] Humanities and Social Sciences/Economics and Finance, Social Sciences (miscellaneous), 050205 econometrics
Abstract: When a firm undertakes activities which are risky for the environment, the conflict between social and private incentives to exercise safety care requires imposing fines in case a damage occurs. Introducing asymmetric information on the firm's wealth, we show that the fines and probabilities of investigation are systematically too low compared to their optimal level under complete information. This effect is exacerbated when the public agency in charge can no longer commit to an investigation strategy. Compounding asymmetric information with a government failure provides a possible explanation of the significant trend in practice towards a weak enforcement of environmental policies.*
Published: 2011

31. 'When Should Manufacturers Want Fair Trade?': New Insights from Asymmetric Information when Supply Chains Compete

Author: David Martimort, Salvatore Piccolo, Jakub Kastl, Stanford University [Stanford], Paris-Jourdan Sciences Economiques (PSE), École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Paris School of Economics (PSE), Università degli studi di Napoli Federico II, Stanford University, École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), and Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE)
Subjects: Economics and Econometrics, business.industry, Moral hazard, Strategy and Management, Supply chain, 05 social sciences, Adverse selection, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, General Business, Management and Accounting, Microeconomics, Information asymmetry, Fair trade, Management of Technology and Innovation, Bilateral monopoly, 0502 economics and business, Economics, 050207 economics, business, Settore SECS-P/01 - Economia Politica, Industrial organization, Externality, 050205 econometrics, Downstream (petroleum industry)
Abstract: We study a model of competing manufacturer/retailer pairs where adverse selection and moral hazard are coupled with promotional externalities at the downstream level. In contrast to earlier models mainly focusing on a bilateral monopoly setting, we show that with competing brands a 'laissez-faire' approach towards vertical price control might not always promote productive efficiency. Giving manufacturers freedom to control retail prices is more likely to harm consumers when retailers impose positive promotional externalities on each other, and the converse is true otherwise. Our simple model also suggests that, with competing supply chains, consumers and manufacturers might prefer different contractual modes if promotional externalities have substantial effects on demands.
Published: 2011
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32. The public management of risk: Separating ex ante and ex post monitors

Author: David Martimort, Yolande Hiriart, Jerome Pouyet, Centre de REcherches sur les Stratégies Economiques (EA 3190) (CRESE), Université de Franche-Comté (UFC), Université Bourgogne Franche-Comté [COMUE] (UBFC)-Université Bourgogne Franche-Comté [COMUE] (UBFC), Paris-Jourdan Sciences Economiques (PSE), École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Economie des Ressources Naturelles (LERNA), Université Toulouse 1 Capitole (UT1)-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), Toulouse School of Economics (TSE), École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1), Institut d'économie industrielle (IDEI), Université Toulouse 1 Capitole (UT1), Groupe de recherche en économie mathématique et quantitative (GREMAQ), Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Université Toulouse 1 Capitole (UT1), Paris-Jourdan Sciences Economiques (PJSE), École normale supérieure - Paris (ENS Paris)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Université Toulouse Capitole (UT Capitole), Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), Toulouse School of Economics (TSE-R), Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS), Institut d'Economie Industrielle (IDEI), Université de Toulouse (UT)-Université de Toulouse (UT), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS-PSL), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), École normale supérieure - Paris (ENS-PSL), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Université Bourgogne Franche-Comté [COMUE] (UBFC)-Université de Franche-Comté (UFC), École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées, Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS), Centre de REcherches sur les Stratégies Economiques - UFC ( CRESE ), Université Bourgogne Franche-Comté ( UBFC ) -Université de Franche-Comté ( UFC ), Paris-Jourdan Sciences Economiques ( PSE ), Centre National de la Recherche Scientifique ( CNRS ) -École des Ponts ParisTech ( ENPC ) -École des hautes études en sciences sociales ( EHESS ) -Institut National de la Recherche Agronomique ( INRA ) -École normale supérieure - Paris ( ENS Paris ), Paris School of Economics ( PSE ), Centre National de la Recherche Scientifique (CNRS)-École des Ponts ParisTech (ENPC)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-École normale supérieure - Paris (ENS Paris), Centre de REcherches sur les Stratégies Economiques (UR 3190) (CRESE), and Bauer, Caroline
Subjects: Economics and Econometrics, Monitoring, Risk Regulation, Monitoring, Capture, Integration, Separation, media_common.quotation_subject, jel:D82, Integration, Capture, Separation, Risk regulation, Public management, Integration and separation, 0502 economics and business, JEL : D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D82 - Asymmetric and Private Information • Mechanism Design, ddc:330, [ SHS.ECO ] Humanities and Social Sciences/Economies and finances, 050207 economics, L51, [SHS.ECO] Humanities and Social Sciences/Economics and Finance, 050205 econometrics, media_common, Risk Regulation, Ex-ante, Public economics, JEL: L - Industrial Organization/L.L5 - Regulation and Industrial Policy/L.L5.L51 - Economics of Regulation, 05 social sciences, JEL : L - Industrial Organization/L.L5 - Regulation and Industrial Policy/L.L5.L51 - Economics of Regulation, jel:L51, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Intervention (law), D82, risk regulation,monitoring,capture,integration and separation, Incentive, Business, Welfare, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D82 - Asymmetric and Private Information • Mechanism Design, Finance
Abstract: When a firm undertakes risky activities, the conflict between social and private incentives to exercise safety care requires public intervention. This control takes the form of both monetary incentives but also monitoring taking place either ex ante or ex post, i.e. before or after an accident occurs. We delineate the respective scopes of these monitoring activities when public monitors are either benevolent or corruptible. Separation between the ex ante and the ex post monitors helps to prevent capture, increases the likelihood of ex post investigation and improves welfare., Lorsqu'un acteur privé entreprend une activité risqué, le conflit entre les incitations sociale et privée à réduire le risque nécessite une intervention publique. Ce contrôle prend la forme de transferts monétaires incitatifs mais aussi d'audit ex ante et ex post, c'est-à-dire avant et après la réalisation d'un accident. Nous nous intéressons à l'interaction entre ces audits, lorsque les superviseurs sont bienveillants ou corruptibles. La séparation entre les tâches d'audit ex ante et ex post permet de réduire la capture des superviseurs, augmente la fréquence d'intervention ex post et accroît le bien-être.
Published: 2010
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33. The Cost of Contract Renegotiation: Evidence from the Local Public Sector

Author: Philippe Gagnepain, David Martimort, Marc Ivaldi, Centre d'économie de la Sorbonne (CES), Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS), Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Toulouse School of Economics (TSE), Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS), Paris-Jourdan Sciences Economiques (PSE), École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), Ce travail a bénéficié d'une aide de l'Etat gérée par l'Agence Nationale de la Recherche au titre du programme ' Investissements d'avenir ' portant la référence ANR-10-LABX-93-01. This work was supported by the French National Research Agency, through the program Investissements d'Avenir, ANR-10--LABX-93-01., Université Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS), École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1), École normale supérieure - Paris (ENS Paris)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), and Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées
Subjects: Economics and Econometrics, media_common.quotation_subject, JEL: L - Industrial Organization/L.L9 - Industry Studies: Transportation and Utilities/L.L9.L92 - Railroads and Other Surface Transportation, jel:D82, jel:D86, Microeconomics, jel:R42, 11. Sustainability, 0502 economics and business, Economics, JEL: R - Urban, Rural, Regional, Real Estate, and Transportation Economics/R.R4 - Transportation Economics/R.R4.R48 - Government Pricing and Policy, 050207 economics, Set (psychology), 050205 econometrics, media_common, jel:R48, Contract, Public transit, Renegotiation, business.industry, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D86 - Economics of Contract: Theory, JEL: L - Industrial Organization/L.L5 - Regulation and Industrial Policy/L.L5.L51 - Economics of Regulation, 05 social sciences, Public sector, Subsidy, jel:L92, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, jel:L51, 8. Economic growth, business, Welfare, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D82 - Asymmetric and Private Information • Mechanism Design, JEL: R - Urban, Rural, Regional, Real Estate, and Transportation Economics/R.R4 - Transportation Economics/R.R4.R42 - Government and Private Investment Analysis • Road Maintenance • Transportation Planning
Abstract: Economic theory claims that contracts renegotiation prevents from reaching the informationally constrained efficient solution that could have been obtained under full commitment. Assessing the cost of renegotiation compared to the full commitment scenario still remains an open issue from an empirical viewpoint. To address this question, we fit a structural principal-agent model with renegotiation on a set of contracts for urban transport services. The model captures two important features of the industry. First, only two types of contracts are used in practice (fixed-price and cost-plus). Second, subsidies are greater when a cost-plus contract was signed earlier on than following a fixed-price contract. We then compare a scenario with renegotiation and a hypothetical situation with full commitment. We conclude that the welfare gains from improving commitment would be significant but would accrue mostly to operators., La théorie économique affirme que la renégociation des contrats empêche d'atteindre une solution efficace qui peut être obtenue en cas d'engagement complet du régulateur. L'évaluation du coût de la renégociation par rapport au scénario " engagement complet " reste une question ouverte d'un point de vue empirique. Pour répondre à cette question, nous ajustons un modèle structurel principal-agent avec renégociation à un ensemble de contrats de services de transport urbain. Le modèle tient compte de deux caractéristiques importantes de l'industrie. Tout d'abord, seuls deux types de contrats sont utilisés dans la pratique (prix fixe ou coût du service). Ensuite, les subventions sont plus importantes lorsque un contrat de type coût du service a été signé avant un contrat à prix fixe. Nous comparons ensuite le scénario avec renégociation et celui plus hypothétique d'engagement total. Nous concluons que les gains de bien-être issus de l'amélioration de l'engagement seraient importants, mais reviendraient essentiellement aux opérateurs.
Published: 2010
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34. Common agency and public good provision under asymmetric information

Author: David Martimort, Humberto Moreira, Toulouse School of Economics (TSE), École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées, and Fundacao Getulio Vargas [Rio de Janeiro] (FGV)
Subjects: ex post and interim efficiency, Common agency, asymmetric information, public goods, ex post and interim efficiency, public goods, Asymmetric information, Pooling, jel:D82, jel:H41, jel:D86, Microeconomics, Information asymmetry, Complete information, asymmetric information, 0502 economics and business, Agency (sociology), Economics, ddc:330, Ex post and interim efficiency, Common agency, 050207 economics, Robustness (economics), Private information retrieval, B- ECONOMIE ET FINANCE, 050205 econometrics, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D86 - Economics of Contract: Theory, 05 social sciences, JEL: H - Public Economics/H.H4 - Publicly Provided Goods/H.H4.H41 - Public Goods, Public good, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, D82, H41, Inefficiency, General Economics, Econometrics and Finance, D86, JEL: D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D82 - Asymmetric and Private Information • Mechanism Design, Public goods
Abstract: The provision of public goods under asymmetric information has most often been viewed as a mechanism design problem under the aegis of an uninformed mediator. This paper focuses on institutional contexts without such a mediator. Contributors privately informed on their willingness to pay non-cooperatively offer contribution schedules to an agent who produces the public good on their behalf. In any separating and informative equilibrium of this common agency game under asymmetric information, instead of reducing marginal contributions to free-ride on others, principals do so to screen the agent's endogenous private information obtained from privately observing other principals' offers. Under weak conditions, the existence of a differentiable equilibrium is shown. Equilibria are always ex post inefficient and interim efficient if and only if the type distribution has a linear inverse hazard rate. This points to the major inefficiency of contribution games under asymmetric information and stands in contrast to the more positive efficiency result that the common agency literature has unveiled when assuming complete information. Extensions of the model address direct contracting between principals, the existence of pooling uninformative equilibria, and the robustness of our findings to the possibility that principals entertain more complex communication with their agent.
Published: 2010
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35. Partenariats Public-Privés : quelques réflexions

Author: Elisabetta Iossa, Jerome Pouyet, David Martimort, Brunel University London [Uxbridge], Università degli Studi di Roma Tor Vergata [Roma], Toulouse School of Economics (TSE), École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1), École polytechnique (X), Centre for Economic Policy Research (CEPR), Centre for Economic Policy Research, and Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées
Subjects: 0502 economics and business, 05 social sciences, 050207 economics, jel:H11, Settore SECS-P/01 - Economia Politica, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, General Economics, Econometrics and Finance, 050203 business & management
Abstract: This paper offers some results on the comparison of the costs and benefits associated to the Public-Private Partnerships and to the traditional mode of public contracting. We conclude by explorng the limits of the model. Classification JEL : H11
Published: 2008
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36. To build or not to build: Normative and positive theories of public-private partnerships

Author: Jerome Pouyet, David Martimort, Institut d'Economie Industrielle (IDEI), Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées, Groupe de recherche en économie mathématique et quantitative (GREMAQ), Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Université Toulouse 1 Capitole (UT1), Institut Universitaire de France (IUF), Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche (M.E.N.E.S.R.), École polytechnique (X), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS), and Institut d'économie industrielle (IDEI)
Subjects: Finance, Economics and Econometrics, business.industry, Strategy and Management, 05 social sciences, Economics, Econometrics and Finance (miscellaneous), Perspective (graphical), Capture, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, JEL: H - Public Economics/H.H1 - Structure and Scope of Government/H.H1.H11 - Structure, Scope, and Performance of Government, Agency costs, Incentive, General partnership, Bundling/unbundling, 0502 economics and business, Industrial relations, Economics, Normative, 050207 economics, business, 050203 business & management, Externality, Industrial organization, Public-private partnership
Abstract: This paper analyzes whether the two tasks of building infrastructures which are socially useful in providing public services and managing these assets should be bundled or not. When performance contracts can be written, both tasks should be performed altogether by the same firm if a better design of the infrastructure helps also to save on operating costs. Otherwise, tasks should be kept apart and undertaken by different units. In incomplete contracting environments we isolate conditions under which either the traditional form of public provision of services or the more fashionable public–private partnership emerges optimally. The latter dominates when there is a positive externality and the private benefits from owning assets are small enough. Finally, we take a political economy perspective and study how incentive schemes are modified under the threat of capture of the decision-makers. Much of the gains from bundling may be lost in this case.
Published: 2008
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37. The regulator and the judge: the optimal mix in the control of environmental risk

Author: Yolande Hiriart, David Martimort, Jerome Pouyet, Economie des Ressources Naturelles (LERNA), Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), Université des Sciences Sociales (Toulouse 1), Groupe de recherche en économie mathématique et quantitative, Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS), École polytechnique (X), Toulouse School of Economics (TSE), École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)-Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées, Institut d'Economie Industrielle (IDEI), Groupe de recherche en économie mathématique et quantitative (GREMAQ), Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Université Toulouse 1 Capitole (UT1), Toulouse School of Economics (TSE-R), Université Toulouse Capitole (UT Capitole), Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS), Université de Toulouse (UT)-Université de Toulouse (UT), Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), Institut d'économie industrielle (IDEI), Université Toulouse 1 Capitole (UT1)-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), ProdInra, Migration, Bauer, Caroline, Université de Toulouse (UT), and Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS)
Subjects: ENVIRONMENTAL RISK, Welfare economics, 05 social sciences, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, [SHS]Humanities and Social Sciences, Microeconomics, ASYMMETRIC INFORMATION, Regulation, Liability, Environmental Risk, Asymmetric Information, Environmental risk, LIABILITY, 0502 economics and business, Political Science and International Relations, Economics, REGULATION, [SHS] Humanities and Social Sciences, 050207 economics, [SHS.ECO] Humanities and Social Sciences/Economics and Finance, 050205 econometrics
Abstract: A firm engaged in activities which are environmentally risky has private information both on its choice of safety care and on the level of its assets. We study the interaction between the ex ante audit of the firm's precautionary effort by a regulator and the ex post check on the true level of the firm's assets by a judge following an accident. Both instruments are useful from an incentive viewpoint. The optimal policy mix between the regulator and the judge depends on the rule determining the judge's intervention and on the quality of the regulatory enforcement. We discuss the incentives of the judge and the regulator to broaden their mandates and undertake the task of the other branch. Finally, we interpret different scenarii for the regulator's and the judge's interventions in terms of legal principles., Nous considérons une firme qui génère un risque pour l’environnement via son activité industrielle et qui a une information privée à la fois sur son effort de précaution et sur le montant de ses actifs. Nous étudions l'interaction entre l'audit ex ante de l'effort de précaution par un régulateur et la vérification ex post de la capacité financière par un juge en cas d'accident. Du point de vue des incitations, les deux instruments sont utiles. Le policy-mix optimal dépend de la règle gouvernant l'intervention ex post et de l'efficience de l'intervention ex ante.
Published: 2008

38. The Benefits of Extended Liability

Author: David Martimort, Yolande Hiriart, Economie des Ressources Naturelles (LERNA), Université Toulouse Capitole (UT Capitole), Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), Groupe de recherche en économie mathématique et quantitative, Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS), Université de Toulouse (UT), Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS), Université des Sciences Sociales (Toulouse 1), and ProdInra, Migration
Subjects: ENVIRONMENTAL RISK, WEALTH, Economics and Econometrics, media_common.quotation_subject, [SHS]Humanities and Social Sciences, Microeconomics, BENEFITS, 0502 economics and business, Economics, 050207 economics, LENDER, B- ECONOMIE ET FINANCE, 050205 econometrics, media_common, Limited liability, 05 social sciences, Liability, Stakeholder, EXTENDED LIABILITY, JUDGMENT PROOF FIRMS, CHOICE, Bargaining power, Principal (commercial law), Value (economics), [SHS] Humanities and Social Sciences, Level of care, Welfare
Abstract: International audience; We characterize the optimal regulation of a firm that undertakes an environmentally risky activity. This firm (the agent) is protected by limited liability and bound by contract to a stakeholder (the principal). The level of safety care exerted by the agent is nonobservable. This level of care depends both on the degree of incompleteness of the regulatory contract and on the allocation of bargaining power between the principal and the agent. Increasing the wealth of the principal that can be seized upon an accident has no value when private transactions are regulated but might otherwise strictly improve welfare. An incomplete regulation supplemented by an ex post extended liability regime can sometime achieve the second best.
Published: 2006

39. Delegated Monitoring versus Arm's-Length Contracting

Author: David Martimort, Vianney Dequiedt, Laboratoire d'Economie Appliquée = Grenoble Applied Economics Laboratory (GAEL), Université Pierre Mendès France - Grenoble 2 (UPMF)-Institut National de la Recherche Agronomique (INRA), Economie des Ressources Naturelles (LERNA), Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), Université Pierre Mendès France - Grenoble 2 (UPMF)-Institut National de la Recherche Agronomique (INRA)-Centre National de la Recherche Scientifique (CNRS), Université Toulouse Capitole (UT Capitole), and Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA)
Subjects: Economics and Econometrics, Strategy and Management, Information sharing, 05 social sciences, Economics, Econometrics and Finance (miscellaneous), 16. Peace & justice, [SHS]Humanities and Social Sciences, Microeconomics, Consolidation (business), Procurement, 0502 economics and business, Industrial relations, Economics, 050207 economics, B- ECONOMIE ET FINANCE, Industrial organization, 050205 econometrics
Abstract: International audience; L'article discute les conditions sous lesquelles un principal préfère induire un partage d'information et une coordination active entre les agents de son organisation (consolidation) plutôt que de les laisser entrer dans une relation contractuelle de sous-traitance (délégation). Le contrat optimal doit induire l'action que le principal préfère : contrôle (audit) d'un agent sur l'autre ou sous-traitance. Ce faisant, le principal anticipe qu'à chaque action correspond un ensemble propre de contraintes d'incitations collectives. Du fait de l'existence du coût fixe de l'activité de contrôle, le problème auquel fait face le principal n'est pas convexe mais reste néanmoins soluble. Les organisations optimales diffèrent quant à leur degré de consolidation. Les bornes des différents régimes organisationnels sont caractérisées analytiquement en fonction du coût de l'activité de contrôle.
Published: 2004
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40. The benefits of central bank's political independence

Author: Emmanuelle Gabillon, David Martimort, Groupe de Recherche en Economie Théorique et Appliquée (GREThA), Université de Bordeaux (UB)-Centre National de la Recherche Scientifique (CNRS), Groupe de recherche en économie mathématique et quantitative (GREMAQ), Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Université Toulouse 1 Capitole (UT1), Robert, Sandrine, Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées, Centre National de la Recherche Scientifique (CNRS)-Université de Bordeaux (UB), Université Toulouse 1 Capitole (UT1), and Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS)
Subjects: Inflation, Macroeconomics, Economics and Econometrics, Ex-ante, Inflation targeting, media_common.quotation_subject, 05 social sciences, Agency cost, Monetary policy, Social Welfare, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Forward guidance, Independence, 8. Economic growth, 0502 economics and business, Economics, G2, G3, 050207 economics, [SHS.ECO] Humanities and Social Sciences/Economics and Finance, B- ECONOMIE ET FINANCE, Finance, ComputingMilieux_MISCELLANEOUS, 050205 econometrics, media_common
Abstract: We consider a two-tier model of monetary policy where the central banker is both subject to the explicit influence of elected political principals through contracts and the implicit influence of interest groups willing to capture monetary policy. We analyze the impact of granting independence to the central banker on the scope for capture and the agency costs of delegating the monetary policy to a central banker. Political independence increases those agency costs but significantly stabilizes the politically induced fluctuations of inflation and improves ex ante social welfare.
Published: 2004

41. On the optimal use of ex ante regulation and ex post liability

Author: David Martimort, Yolande Hiriart, Jerome Pouyet, Economie des Ressources Naturelles (LERNA), Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), Centre National de la Recherche Scientifique (CNRS), Centre de Recherche en Economie et Statistique, Université Toulouse Capitole (UT Capitole), and Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA)
Subjects: Economics and Econometrics, 050208 finance, Actuarial science, Ex-ante, Moral hazard, 05 social sciences, Liability, jel:L51, EX POST LIABILITY, [SHS]Humanities and Social Sciences, Microeconomics, jel:K13, Lawsuit, jel:K32, Incentive, Harm, 0502 economics and business, Economics, Verifiable secret sharing, 050207 economics, B- ECONOMIE ET FINANCE, Private information retrieval, EX ANTE REGULATION, Finance
Abstract: International audience; We build on Shavell's [J. Econ. 15 (1984) 271] analysis of the optimal use of ex ante and ex post interventions when a firm engages into activities potentially risky for the environment or third parties and has private information about the level of the damage. The regulator enforces ex ante a standard of precautionary effort but is uninformed about the harm level; ex post, in the event of an accident, the judge may bring a lawsuit and discover the harm level. The social optimum can be reached if, ex ante, the regulator offers the firm a menu of incentive contracts (rewards, penalties and verifiable standards). When the precautionary effort is no longer verifiable, the inefficiencies generated by the moral hazard incentive problem cannot be circumvented.
Published: 2004
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42. Transaction Costs and Incentive Theory

Author: David Martimort, Eric Malin, Centre de recherche en économie et management (CREM), Université de Caen Normandie (UNICAEN), Normandie Université (NU)-Normandie Université (NU)-Université de Rennes 1 (UR1), Université de Rennes (UNIV-RENNES)-Université de Rennes (UNIV-RENNES)-Centre National de la Recherche Scientifique (CNRS), Groupe de recherche en économie mathématique et quantitative (GREMAQ), Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées, Malin, Eric, Normandie Université (NU)-Normandie Université (NU)-Université de Rennes (UR)-Centre National de la Recherche Scientifique (CNRS), Université Toulouse Capitole (UT Capitole), and Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS)
Subjects: Transaction cost, Economics and Econometrics, Mechanism design, Revelation principle, 05 social sciences, Art history, théorie des incitations, coûts de transaction, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Bounded rationality, théorie de la réglementation, Microeconomics, Coase theorem, Industrial relations, 8. Economic growth, 0502 economics and business, Incomplete contracts, Sociology, Allocative efficiency, 050207 economics, [SHS.ECO] Humanities and Social Sciences/Economics and Finance, 050203 business & management, Externality, ComputingMilieux_MISCELLANEOUS, 050205 econometrics
Abstract: This paper tries to reconcile incentive theory with transaction costs theory. We first discuss the fundamental assumptions underlying the use of the Revelation Principle in the standard mechanism design literature and show how various contractual incompletenesses and externalities induced by transaction costs affect the basic trade-off between allocative efficiency and informational rents highlighted by this literature. We then propose reduced form formula to precisely describe the impact of these transaction costs in various contexts., Cet article propose de réconcilier la théorie des incitations et la théorie des coûts de transaction. Nous rappelons dans un premier temps les hypothèses fondamentales sous-tendant le Principe de Révélation utilisé dans la théorie des mécanismes incitatifs. Nous montrons comment des incomplétudes contractuelles et certaines externalités induites par ces coûts de transaction affectent l'arbitrage entre efficacité allocative et rentes informationnelles. Nous proposons alors des formes réduites permettant de décrire précisément l'impact de ces coûts de transaction dans un certain nombre de contextes contractuels., Malin Eric, Martimort David. Transaction Costs and Incentive Theory. In: Revue d'économie industrielle, vol. 92, 2e et 3eme trimestres 2000. Économie des contrats : bilan et perspectives, sous la direction de Éric Brousseau et Jean-Michel Glachant. pp. 125-148.
Published: 2000

43. Exclusive dealing, common agency and multiprincipals incentive theory

Author: David Martimort, Station d'économie et sociologie rurales, Institut National de la Recherche Agronomique (INRA), and ProdInra, Migration
Subjects: Economics and Econometrics, Cost–benefit analysis, business.industry, [SDV]Life Sciences [q-bio], 05 social sciences, Adverse selection, Distribution (economics), Exclusive dealing, [SDV] Life Sciences [q-bio], Competition (economics), Microeconomics, Incentive, Complementarity (molecular biology), 0502 economics and business, Agency (sociology), Business, 050207 economics, 050205 econometrics
Abstract: What are the costs and benefits of exclusive dealing and why do manufacturers choose to organize their retailing markets in this way instead of taking a common retailer? This article traces back the benefits of this organizational form of distribution to the provision of incentives in a setting of competing manufacturer-retailer hierarchies under adverse selection. It first develops a theoretical model that studies competition between hierarchies under the assumption of secret wholesale contracts. Second, it analyzes a game of choice of retailing channels between rival manufacturers. Depending on the extent of the adverse selection problem and on the complementarity or substitutability of their brands, manufacturers prefer to use either a common or an exclusive retailer.
Published: 1996

44. Contracting and the Disclosure of Ideas in the Innovation Process

Author: Jean-Christophe Poudou, David Martimort, Wilfried Sand-Zantman, Groupe de recherche en économie mathématique et quantitative (GREMAQ), Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS), Laboratoire Montpelliérain d'Économie Théorique et Appliquée (LAMETA), Université Montpellier 1 (UM1)-Université Paul-Valéry - Montpellier 3 (UPVM)-Institut National de la Recherche Agronomique (INRA)-Centre international d'études supérieures en sciences agronomiques (Montpellier SupAgro)-Université de Montpellier (UM)-Centre National de la Recherche Scientifique (CNRS)-Institut national d’études supérieures agronomiques de Montpellier (Montpellier SupAgro), Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement (Institut Agro)-Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement (Institut Agro), Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées, Groupe de recherche en économie mathématique et quantitative ( GREMAQ ), Université Toulouse 1 Capitole ( UT1 ) -Institut National de la Recherche Agronomique ( INRA ) -École des hautes études en sciences sociales ( EHESS ) -Centre National de la Recherche Scientifique ( CNRS ), Laboratoire Montpelliérain d'Économie Théorique et Appliquée ( LAMETA ), Université Montpellier 1 ( UM1 ) -Université Paul-Valéry - Montpellier 3 ( UM3 ) -Centre international d'études supérieures en sciences agronomiques ( Montpellier SupAgro ) -Institut national de la recherche agronomique [Montpellier] ( INRA Montpellier ) -Université de Montpellier ( UM ) -Centre National de la Recherche Scientifique ( CNRS ) -Institut national d’études supérieures agronomiques de Montpellier ( Montpellier SupAgro ), and Université Montpellier 1 (UM1)-Université Paul-Valéry - Montpellier 3 (UM3)-Institut National de la Recherche Agronomique (INRA)-Centre international d'études supérieures en sciences agronomiques (Montpellier SupAgro)-Université de Montpellier (UM)-Centre National de la Recherche Scientifique (CNRS)-Institut national d’études supérieures agronomiques de Montpellier (Montpellier SupAgro)
Subjects: Statistics and Probability, Value (ethics), Economics and Econometrics, business.industry, 05 social sciences, Pooling, Innovation process, Public relations, Intellectual property, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, Microeconomics, Incentive, Innovator, 0502 economics and business, Economics, [ SHS.ECO ] Humanities and Social Sciences/Economies and finances, 050207 economics, Statistics, Probability and Uncertainty, business, Private information retrieval, ComputingMilieux_MISCELLANEOUS, Social Sciences (miscellaneous), 050205 econometrics
Abstract: We analyze contracting between an innovator endowed with an idea and a project developer. The innovator has private information about the value of his idea, whereas the developer must exert some non-verifiable effort at the development stage. The developer may also threaten to leave the relationship after being informed on the value of the idea. The equilibrium contracts distort downwards the developer’s incentives, but differently so depending on the strength of intellectual property rights (IPR). In particular, with intermediate IPR, only pooling contracts arise, with a limited amount of information being revealed at equilibrium.
Published: 2011
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45. Nonexclusive competition in the market for lemons

Author: Attar, Andrea, Mariotti, Thomas, Salanie, François, Attar, Andrea, Salanie, Francois, Toulouse School of Economics (TSE), Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Università degli Studi di Roma Tor Vergata [Roma], Groupe de recherche en économie mathématique et quantitative (GREMAQ), Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de la Recherche Agronomique (INRA)-Université Toulouse 1 Capitole (UT1), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées, Economie des Ressources Naturelles (LERNA), Université Fédérale Toulouse Midi-Pyrénées-Université Fédérale Toulouse Midi-Pyrénées-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), Institut d'Economie Industrielle (IDEI), We thank a co-editor and three anonymous referees for very thoughtful and detailed comments. We also thank Bruno Biais, Felix Bierbrauer, Alberto Bisin, Regis Breton, Arnold Chassagnon, Pradeep Dubey, John Geanakoplos, Piero Gottardi, Martin Hellwig, Philippe Jehiel, David Martimort, Margaret Meyer, David Myatt, Alessandro Pavan, Gwenael Piaser, Michele Piccione, Andrea Prat, Uday Rajan, Patrick Rey, Jean-Charles Rochet, Bernard Salanie, Paolo Siconolfi, Lars Stole, Roland Strausz, Balazs Szentes, and Jean Tirole for very valuable feedback. Finally, we thank seminar audiences at Banca d'Italia, Center for Operations Research and Econometrics, Einaudi Institute for Economics and Finance, London School of Economics and Political Science, Seminaire Roy, Universita degli Studi di Roma 'La Sapienza,' Universita degli Studi di Roma ' Tor Vergata,' University of Oxford, Wissenschaftszentrum Berlin fur Sozialforschung, and Yale University, as well as conference participants at the 2008 Toulouse Workshop of the Paul Woolley Research Initiative on Capital Market Dysfunctionalities, the 2009 Bonn Workshop on Incentives, Efficiency, and Redistribution in Public Economics, the 2009 CESifo Area Conference on Applied Microeconomics, and the 2009 Toulouse Spring of Incentives Workshop for many useful discussions. Financial support from the Einaudi Institute for Economics and Finance, the European Research Council (Starting Grant 203929-ACAP), and the Paul Woolley Research Initiative on Capital Market Dysfunctionalities is gratefully acknowledged., Toulouse School of Economics (TSE-R), Université Toulouse Capitole (UT Capitole), Université de Toulouse (UT)-Université de Toulouse (UT)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS), Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-Commissariat à l'énergie atomique et aux énergies alternatives (CEA), and Université de Toulouse (UT)-Université de Toulouse (UT)
Subjects: TheoryofComputation_MISCELLANEOUS, Economics and Econometrics, statistics and probability, adverse selection, competing mechanism, nonexclusivity, business and economics, mathematics, mathematical methods in social sciences, interdisciplinary applications, social sciences, economics, Adverse selection, Adverse selection, competing mechanisms, nonexclusivity, competing mechanisms, [SHS]Humanities and Social Sciences, Competition (economics), Microeconomics, Information asymmetry, Order (exchange), 0502 economics and business, Economics, 050207 economics, Set (psychology), Settore SECS-P/01 - Economia Politica, 050205 econometrics, The Market for Lemons, Dual model, 05 social sciences, TheoryofComputation_GENERAL
Abstract: International audience; A seller can trade an endowment of a perfectly divisible good, the quality of which she privately knows. Buyers compete by offering menus of nonexclusive contracts, so that the seller can privately trade with several buyers. In this setting, we show that an equilibrium exists under mild conditions and that aggregate equilibrium allocations are generically unique. Although the good for sale is divisible, in equilibrium the seller ends up trading her whole endowment or not trading at all. Trades take place at a price equal to the expected quality of the good, conditional on the seller being ready to trade at that price. Our model thus provides a novel strategic foundation for Akerlof’s (1970) results. It also contrasts with competitive screening models in which contracts are assumed to be exclusive, as in Rothschild and Stiglitz (1976). Latent contracts that are issued but not traded in equilibrium play an important role in our analysis.
Published: 2011
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