Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/159229
Authors: 
Lambertini, Luca
Poddar, Sougata
Sasaki, Dan
Year of Publication: 
2000
Series/Report no.: 
Quaderni - Working Paper DSE 388
Abstract: 
In this paper we take a close look at those strategic incentives arising in a situation where firms share the costs and profits in a multi-firm project, and bargain for their respective (precommitted) split of cost- and profit-shares. We establish that, when each firm's effort contribution to the joint undertaking is mutually observable (which is often the case in closely collaborative operations) and hence can form basis of the contingent cost- and profit-sharing scheme, it is not the gross economic e¢ciency but the super-/sub-additivity of the nett returns from effort that directly affects the sustainability of a profile of firms' effort contributions. The (in)eficiency result we obtain in this paper is of different nature from so-called "free riding" or "team competition" problems : the set of sustainable outcomes with bargaining over precommetted cost- and pro…t-shares is generally neither a superset nor a subset of the sustainable set without bargaining.
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Working Paper

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