Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/28023
Authors: 
Puschke, Kerstin
Year of Publication: 
2005
Series/Report no.: 
Diskussionsbeiträge des Fachbereichs Wirtschaftswissenschaft der Freien Universität Berlin 2005/25
Abstract: 
Authority is modelled as the right to undertake a non-contractible decision in a joint project. We show that the allocation of authority depends on bargaining power and differences in both parties cost functions. The decision-maker is assumed to exert an externality on the other parties. Overall surplus is shared according to generalized Nash bargaining. Under limited liability, the agent with the larger cost parameter receives authority if the agents’ cost parameters are very different. If the agents have similar cost parameters, bargaining power determines the allocation of authority. Possible applications include the introduction of a new product.
Subjects: 
Authority
Decision Rights
Incomplete Contracts
JEL: 
D23
L22
L24
ISBN: 
3938369248
Document Type: 
Working Paper

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