nep-cta New Economics Papers
on Contract Theory and Applications
Issue of 2022‒11‒14
four papers chosen by
Guillem Roig
University of Melbourne

  1. From legal contracts to smart contracts and back again: Towards an automated approach By Butijn, Bert-Jan
  2. Flexibility and Information By Mark Whitmeyer
  3. Fair cost sharing: big tech vs telcos By Jullien, Bruno; Bouvard, Matthieu
  4. Relative-Performance Delegation Destabilizes Upstream Collusion By Lee, Jen-Yao; Wang, Leonard F. S.; Sun, Ji

  1. By: Butijn, Bert-Jan (Tilburg University, School of Economics and Management)
    Date: 2022
  2. By: Mark Whitmeyer
    Abstract: We study the effect of increased flexibility--increasing the number of actions available to an agent by one--on an agent's value for information. Increased flexibility always makes information more valuable if and only if the new action is extremal. This condition is also necessary and sufficient for the agent to not acquire less information as flexibility increases when information is endogenously acquired by the agent. We apply this finding to a monopolistic screening problem in which the good is information and to delegation with information acquisition.
    Date: 2022–10
  3. By: Jullien, Bruno; Bouvard, Matthieu
    Abstract: We study a cost-sharing mechanism where a content provider contributes to covering the costs incurred by a network operator when delivering content to consumers. The costshare not only boosts the content provider's incentives to moderate trac but also aects the price composition for consumers buying access and content. We show the overall eect on consumer welfare depends on the content provider's ability to monetize users. When that ability is high, introducing a cost-share can lead to lower overall prices and higher consumer welfare. We study the robustness of this result to long-term investments in cost reduction by the operator and to heterogeneity in consumers' taste for content. In extensions with multiple contents and multiple operators, contractual externalities arise that suggest a role for regulation.
    Date: 2022–10–25
  4. By: Lee, Jen-Yao; Wang, Leonard F. S.; Sun, Ji
    Abstract: This paper analyzes upstream firms’ collusive sustainability when downstream firms adopt the relative-performance delegation in an infinitely repeated Cournot or Bertrand game. We find that relative-performance delegation makes managers act more aggressive and upstream collusion more difficult to sustain compared to sales-revenue delegation. The driving force is that downstream relative-performance delegation makes more profits for the deviated firm. This result holds regardless of the competition modes.
    Keywords: Relative-performance delegation; Upstream collusion; Vertically related market; Competition modes
    JEL: D21 D43 L13 L21
    Date: 2022–08–17

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