Book chapter
Efficiency of Joint Enterprises with Internal Bargaining
The Economics of Innovation, pp.129-141
Contributions to Economic Analysis, v. 286, Emerald Group Publishing
2009
DOI: 10.1016/S0573-8555(08)00207-1
Abstract
In this paper we take a close look at those strategic incentives arising in a situation where firms share the costs and profits in a multi-firm project, and bargain for their respective (precommitted) split of cost- and profit-shares. We establish that, when each firm's effort contribution to the joint undertaking is mutually observable (which is often the case in closely collaborative operations) and hence can form basis of the contingent cost- and profit-sharing scheme, it is not the gross economic efficiency but the super-/sub-additivity of the nett returns from effort that directly affects the sustainability of a profile of firms' effort contributions. The (in) efficiency result we obtain in this paper is of different nature from so-called "free riding" or "team competition" problems: the set of sustainable outcomes with bargaining over precommitted cost- and profit-shares is generally neither a superset nor a subset of the sustainable set without bargaining.
Details
- Title: Subtitle
- Efficiency of Joint Enterprises with Internal Bargaining
- Creators
- Luca Lambertini - University of AmsterdamSougata Poddar - Duke-NUS Medical SchoolDan Sasaki - The University of Tokyo
- Contributors
- R Cellini (Editor)
- Resource Type
- Book chapter
- Publication Details
- The Economics of Innovation, pp.129-141
- Series
- Contributions to Economic Analysis; v. 286
- DOI
- 10.1016/S0573-8555(08)00207-1
- ISSN
- 0573-8555
- Publisher
- Emerald Group Publishing; Bingley
- Number of pages
- 13
- Language
- English
- Date published
- 2009
- Academic Unit
- Economics
- Record Identifier
- 9984963152902771
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