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on Contract Theory and Applications |
| By: | Wölfing, Nikolas |
| Abstract: | This paper studies the effect of forward contracts on the stability of collusion among firms, competing in supply functions on the spot market. A forward market can increase the range of discount factors which allow to sustain collusion. On the contrary, collusion is destabilised when a potential deviator sells a significant amount forward. Results do not depend on the type (financial or physical) of contract fulfilment and are robust to different levels of demand uncertainty. As a policy implication, the study finds that liquid and anonymous forward markets are incompatible with collusion. |
| Keywords: | forward trading,collusion,supply function equilibrium |
| JEL: | C73 D43 L13 G13 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:19003&r=all |
| By: | Matthias Efing; Harald Hau; Patrick Kampkötter; Jean-Charles Rochet |
| Abstract: | We argue that risk sharing motivates the bank-wide structure of bonus pay. In the presence of financial frictions that make external financing costly, the optimal contract between shareholders and employees involves some degree of risk sharing whereby bonus pay partially absorbs earnings shocks. Using payroll data for 1:26 million employee-years in all functional divisions of Austrian, German, and Swiss banks, we uncover several empirical patterns in bonus pay that are difficult to rationalize with incentive theories of bonus pay - but support an important risk sharing motive. In particular, bonuses respond to performance shocks that are outside the control of employees because they originate in other bank divisions or even outside the bank. |
| Keywords: | banker compensation, risk sharing, bonus pay, operating leverage |
| JEL: | G20 G21 D22 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7495&r=all |
| By: | Napasintuwong, Orachos |
| Abstract: | Thailand is the 2nd largest seed exporter in Asia after China, and maize contributes to the largest export revenue of all seed exports from Thailand. Leading multinational seed companies have invested in research facilities and breeding programs in Thailand since the late 1970s, and this makes Thailand one of important bases of maize seed production. Currently there are five multinational companies integrated in maize seed production in Thailand while many small local companies operate at national or provincial scale. This paper addresses different contract models operated by seed companies, and analyze the factors contributing to the participation of growers in maize seed production contracts. |
| Keywords: | Crop Production/Industries, International Relations/Trade |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare19:283984&r=all |
| By: | Dessein, Wouter; Holden, Richard |
| Abstract: | We analyze a model of hierarchies in organizations where neither decisions themselves nor the delegation of decisions are contractible, and where power-hungry agents derive a private benefit from making decisions. Two distinct agency problems arise and interact: Subordinates take more biased decisions (which favors adding more hierarchical layers), but uninformed superiors may fail to delegate (which favors removing layers). A designer may remove intermediate layers of the hierarchy (eliminate middle managers) or de-integrate an organization by removing top layers (eliminate top managers). We show that stronger preferences for power result in smaller, more de-integrated hierarchies. Our key insight is that hoarding of decision rights is especially severe at the top of the hierarchy. |
| Keywords: | delegation; Hierarchies; Organization Design; Preferences for Power |
| JEL: | D2 L2 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13526&r=all |
| By: | Guillaume Carlier; Kelvin Shuangjian Zhang |
| Abstract: | We give an existence result for the principal-agent problem with adverse selection under general preferences and non-compact allocation space. The result is mainly based on the fact that the principal can always improve a feasible contract by another one which makes larger profit than the outside option from any type of agent. We also treat the case of type-dependent budget constraints. |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1902.06552&r=all |