On the optimality of allowing collusion

Kofman, Fred; Lawarrée, Jacques

doi:10.1016/0047-2727(95)01532-9

Cited by 121 publications

(63 citation statements)

References 13 publications

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“…All these studies do not analyze the impact of legislative structures on electoral accountability, which is instead the focus of our paper. The accountability problem in our set-up with multiple legislators is similar to the corruption deterrence problem in agency models with multiple supervisors, who can collude with the agent they are supposed to monitor (Kofman and Lawarree 1993, Kofman and Lawarree 1996and Mishra 2002.…”

Section: Introductionmentioning

confidence: 99%

Corruption and bicameral reforms

Facchini

Testa

2016

Soc Choice Welf

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During the last decade unicameral proposals have been put forward in fourteen US states. In this paper we analyze the effects of the proposed constitutional reforms, in a setting where decision making is subject to 'hard time constraints', and lawmakers face the opposing interests of a lobby and the electorate. We show that bicameralism might lead to a decline in the lawmakers' bargaining power vis-a-vis the lobby, thus compromising their accountability to voters. Hence, bicameralism is not a panacea against the abuse of power by elected legislators and the proposed unicameral reforms could be effective in reducing corruption among elected representatives. JEL classification: D72, D73

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Section: Introductionmentioning

confidence: 99%

Corruption and bicameral reforms

Facchini

Testa

2016

Soc Choice Welf

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“…Compare (21) and (22) using (10). The shutdown policy is obviously a valuable option only if the …rm is su¢ ciently likely to be e¢ cient.…”

Section: E Csmentioning

confidence: 99%

“…9 See La¤ont and Rochet (1997) for an analysis of the di¤erence between hard information and soft information models. 10 It is usually assumed in the literature that the …rm observes the agency's signal. This can be the case if before signing the collusive agreement the agency must disclose to the …rm the signal it has received.…”

Section: Timingmentioning

confidence: 99%

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Bargaining and Collusion in a Regulatory Model

Fiocco¹,

Gilli²

2012

Recent Advances in the Analysis of Competition Policy and Regulation

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Within a standard three-tier regulatory model, a benevolent principal delegates to a regulatory agency two tasks: the supervision of the …rm's (two-type) costs and the arrangement of a pricing mechanism. The agency may have an incentive to manipulate information to the principal to share the gains of collusion with the …rm. The novelty of this paper is that both the regulatory mechanism and the side contracting between the agency and the …rm are modelled as a bargaining process. While as usual the ine¢ cient …rm does not have any interest in cost manipulation, we …nd that the e¢ cient …rm has an incentive to collude only if the agency's bargaining power is high enough, and the total gains of collusion are now lower than those the two partners would appropriate if the agency could make a take-it-orleave-it o¤er. Then, we focus on the optimal institutional responses to the possibility of collusion. In our setting, where the incompleteness of contracts prevents the principal from designing of a screening mechanism and thus Tirole's equivalence principle does not apply, we show how the players' bargaining powers crucially drive the optimal response to collusion.Keywords: bargaining, collusion, regulation. JEL classi…cation: D73, D82, L51.We are particularly indebted to Roland Strausz, Helmut Bester, Michela Cella, Michele Grillo, Carlo Scarpa for very helpful comments. We also thank Charles Angelucci, Carlo Cambini, Liliane Karlinger, Bruce Lyons and Alessandro Petretto for valuable insights as well as the seminars' participants at

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“…On the other hand, the principal never observes productivity. (Kofman and Lawarree 1996) has the same setup. (Strausz 1997) is interested in a situation where the principal and the supervisor have access to the same monitoring technology, whereas our model relies on superior access of the atypical supervisor to information.…”

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confidence: 99%

Corporate Design for Regulability: A Principal-Agent-Supervisor Model

Engel¹

2006

JITE

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On the optimality of allowing collusion

Cited by 121 publications

References 13 publications

Corruption and bicameral reforms

Corruption and bicameral reforms

Bargaining and Collusion in a Regulatory Model

Corporate Design for Regulability: A Principal-Agent-Supervisor Model

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