Ecole des HEC-DEEP
Thèse de doctorat en Sciences Economiques mention "économie politique"


Joao VIEIRA MONTEZ

Three Essays in Incomplete Contracts

Co-directeurs: Thomas von Ungern-Sternberg et Dezsö Szalay
Imprimatur: septembre 2007

Abstract

In the first Chapter, "Downstream mergers and producer's capacity choice", I study the effect of downstream horizontal mergers on the upstream producer's capacity choice. Contrary to conventional wisdom, I find a non-monotonic relationship: horizontal mergers induce a higher upstream capacity if the cost of capacity is low and a lower upstream capacity if this cost is high. I explain this result by decomposing the total effect into two competing effects: a change in hold-up and a change in bargaining erosion.

In the second chapter, "Inefficient durable-goods monopolies", I study the efficiency of durable-goods monopolies in the standard infinite-horizon model with a finite number of buyers. I show that, while all stationary pure-strategy equilibria are efficient, there also exist previously unstudied inefficient stationary equilibria. Inefficiency occurs when high valuation buyers randomize their purchase decision while trying to buy at a low price which is offered only once a critical mass has purchased. This attrition behavior results in real-time delay and provides a new rationale for stochastic sales and inefficiency in monopolized durable-goods markets.

In the third chapter, "Contract bargaining with multiple agents", I provide the non-cooperative foundations to the bargaining solution I use in the first chapter: the Shapley value. I study a bargaining game between a principal and N agents when the utility of each agent depends on all agents' trades with the principal. I show that equilibria payoffs coincide with the Shapley value of the underlying coalitional game with an appropriately defined characteristic function, which under standard assumptions coincides with the principal's equilibrium profits in the offer game. Since the problem accounts for differences in information and agents' conjectures, the outcome can be either efficient (e.g. public contracting) or inefficient (e.g. passive beliefs).