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on Contract Theory and Applications |
| By: | López-Martín Bernabé; Pérez-Reyna David |
| Abstract: | We construct a framework of firm dynamics to evaluate the impact of the enforcement of contracts between final goods producers and their intermediate goods suppliers on firm growth, technology accumulation, and aggregate productivity. We build upon the static contracts model of Acemoglu et al. (2007), where the final goods firm chooses technology in contractible activities conducted by suppliers of intermediate inputs. Suppliers select investments in noncontractible activities, anticipating the payoffs that will result from bargaining with the producer of the final good. We show that contractual incompleteness implies a wedge on profits for producers of the final good, which discourages technology accumulation. Our model estimates differences in output per worker of up to 33% between economies with complete and incomplete contracts. The impact on firm growth, the age and size distribution of firms is quantitatively significant. |
| Keywords: | size-dependent distortions;contracts;aggregate productivity;firm dynamics |
| JEL: | D86 E23 O11 O40 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdm:wpaper:2019-07&r=all |
| By: | Belloc, Filippo |
| Abstract: | We study hours worked by drivers in the peer-to-peer transportation sector with cross-side network effects. Medallion lease (regulated market), commission-based (Uber-like pay) and profit-sharing ("pure" taxi coop) compensation schemes are compared. Our static model shows that network externalities matter, depending on the number of active drivers. When the number of drivers is limited, in the presence of positive network effects, a regulated system always induces more hours worked, while the commission fee influences the comparative incentives towards effort of Uber-like pay versus profit-sharing. When the number of drivers is infinite (or close to it), the influence of network externalities on optimal effort vanishes. |
| Keywords: | Uber, network effects, ride-sharing, pay schemes, effort, taxi industry |
| JEL: | J22 J33 L91 |
| Date: | 2019–06–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:95179&r=all |
| By: | Leyla Jianyu Han; Kenneth Kasa (Simon Fraser University) |
| Abstract: | The paper incorporates ambiguity and information processing contraints into a model of intermediary asset pricing. Financial intermediaries are assumed to possess greater information processing capacity. Households purchase this capacity, and then delegate their investment decisions to intermediaries. As in He and Krishnamurthy (2012), the delegation contract is constrained by a moral hazard problem, which gives rise to a minimum capital requirement. Both agents have a preference for robustness, reflecting ambiguity about asset returns (Hansen and Sargent (2008)). We show that ambiguity aversion tightens the capital constraint, and amplifies its effects. Indirect inference is used to calibrate the model's parameters to the stochastic properties of asset returns. Detection error probabilities are used to discipline the degree of ambiguity aversion. The model can explain both the unconditional moments of asset returns and their state dependence, even with DEPs in excess of 20%. |
| Keywords: | Ambiguity, Information Processing, Asset Pricing, Financial Crisis |
| JEL: | D81 G01 G12 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:sfu:sfudps:dp19-04&r=all |
| By: | Yusufcan Masatlioglu; Daisuke Nakajima; Emre Ozdenoren |
| Abstract: | In this note, we consider the pricing problem of a profit-maximizing monopolist who faces naive consumers with convex self-control preferences. |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1907.07628&r=all |