The allocation of authority under limited liability
Puschke, Kerstin ;  Universität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft

Main titleThe allocation of authority under limited liability
AuthorPuschke, Kerstin
InstitutionUniversität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft
No. of Pages31 S.
Series Diskussionsbeiträge des Fachbereichs Wirtschaftswissenschaft ; 2005/25 : Volkswirtschaftliche Reihe
Keywordsauthority, decision rights, incomplete contracts
Classification (DDC)330 Economics
Also published in
AbstractAuthority is modelled as the right to undertake a non-contractible
decision in a joint project. We show that the allocation of authority
depends on bargaining power and differences in both parties cost
functions. The decision-maker is assumed to exert an externality on
the other parties. Overall surplus is shared according to generalized
Nash bargaining. Under limited liability, the agent with the larger
cost parameter receives authority if the agents’ cost parameters are
very different. If the agents have similar cost parameters, bargaining
power determines the allocation of authority. Possible applications
include the introduction of a new product.
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FU DepartmentDepartment Business and Economics
Year of publication2005
Type of documentBook
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Created at2008-06-25 : 09:07:47
Last changed2014-01-23 : 04:20:05
Static URLhttp://edocs.fu-berlin.de/docs/receive/FUDOCS_document_000000000404