@techreport{Harstad2010Incomplete,
abstract = {I develop a dynamic model of costly private provision of public goods where agents can also invest in cost-reducing technologies. Despite the n+1 stocks in the model, the analysis is tractable and the (Markov perfect) equilibrium unique. The framework is used to derive optimal incomplete contracts in a dynamic setting. If the agents can contract on provision levels, but not on investments, they invest suboptimally little, particularly if the contract is short-term or close to its expiration date. To encourage sufficient investments, the optimal and equilibrium contract is more ambitious if it is short-lasting, and it is tougher to satisfy close to its expiration date. If renegotiation is possible, such a contract implements the first best. The results have important implications for how to design a climate treaty.},
address = {Evanston},
author = {B\aa{}rd Harstad},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {D86; H87; Q54; F53; 330; dynamic private provision of public goods; dynamic common-pool problems; dynamic hold-up problems; incomplete contracts; renegotiation design; climate change and climate agreements},
language = {eng},
number = {1504},
publisher = {Northwestern Univ., Kellogg Graduate School of Management, Center for Mathematical Studies in Economics and Management Science},
title = {Incomplete contracts in dynamic games},
type = {Discussion Paper, Center for Mathematical Studies in Economics and Management Science},
url = {http://hdl.handle.net/10419/59673},
year = {2010}
}
