Investment and Market Structure in Common Agency Games

I study the incentives of a common buyer to undertake cooperative investment with a group of suppliers providing a homogeneous input. In my model, investment is not directed to increase the gains from trade but to enhance the competitive pressure among suppliers. At the same time, however, investmen...

Descripción completa

Detalles Bibliográficos
Autor Principal: Roig, Guillem
Otros Autores: Facultad de Economía
Formato: Documento de trabajo (Working Paper)
Lenguaje:Español (Spanish)
Publicado: 2018
Materias:
Acceso en línea:http://repository.urosario.edu.co/handle/10336/17852
Descripción
Sumario:I study the incentives of a common buyer to undertake cooperative investment with a group of suppliers providing a homogeneous input. In my model, investment is not directed to increase the gains from trade but to enhance the competitive pressure among suppliers. At the same time, however, investment may strengthen the bargaining position of suppliers. Which effect dominates depends on the intensity of competition in the trading game, which also determines the equilibrium distribution of investment. Then, the model reproduces different market structures, and a firm may have higher incentives to become active in markets where competition is expected to be vigorous.