A dynamic theory of countervailing power

Article Abstract:

A model of an infinitely repeated procurement auction is developed with one buyer and many sellers. Sellers are compelled to reduce prices when a buyer can accumulate a backlog of unfilled orders resembling a increase in demand. Large buyers and buyer mergers also result to lower prices. The significant implication of the model is the effect of buyer growth through addition on other buyers that do not grow. Buyers that do not grow earn lower profit even if they do not compete with each other on the product market.

Models, Purchasing

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An empirical examination of moral hazard in the vehicle inspection market

Article Abstract:

Moral hazard results in diagnosis-cure markets, including auto repair and health care, when sellers are motivated to misrepresent a buyer's condition to enlarge demand for the treatments they supply. By employing a transaction-level data, it was discovered that consumers generally provide companies and inspectors incentives to help them pass. Some cross-firm disparities that are constant with agency theory are evident.

Beliefs, opinions and attitudes, Overhead costs, Consumers, Attitudes

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Monitoring the principal with multiple agents

Article Abstract:

double moral hazard occurs in the principal-agent model when both parties offer a nonverifiable input after contracting, prompting a second-best contract in the standard principal-agent relationship. When the principal's input is accessible to two agents, which usually describes franchising, balanced-budget contracts occur which resolve completely double moral hazard.

Lessors of Nonfinancial Intangible Assets (except Copyrighted Works), Patent owners and lessors, Franchising, Bonus & Merit Payments, Management, Franchises, Agency theory, Bonuses

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