Trading with a common agent under complete information: A characterization of Nash equilibria

Chiesa, Gabriella; Denicolò, Vincenzo

doi:10.1016/j.jet.2008.05.005

Cited by 25 publications

(34 citation statements)

References 21 publications

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“…17 Our results can be easily interpreted in the light of the common agency literature since our model considers two principals (the two governments) that submit offers to a common agent (the foreign investor). In particular, Chiesa and Denicolò (2009) show that in a common agency game with two principals and complete information, each principal's payoff corresponds exactly to its marginal contribution to social surplus even when we relax the assumption of truthful strategies.…”

Section: Regional Welfare Implicationsmentioning

confidence: 97%

“…We want to stress, however, that any tax rate 9 Keen (1993), among others, argues that the effective taxation of multinational firms is source-based, even though tax codes may stipulate differently. 10 It should be clear that if country B enjoys both a location and a fiscal advantage over country A, policy competition cannot turn the latter into a more attractive location for FDI.…”

Section: Profits Of the Multinational Firmmentioning

confidence: 99%

“…Hence, the firm takes its investment decision according to condition (10) and the equilibrium values of regional welfare and firm's after-tax profits are defined as follows. When FDI goes to country A:…”

Section: No Policy Competitionmentioning

confidence: 99%

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Competition for FDI and Profit Shifting: On the Effects of Subsidies and Tax Breaks

Amerighi¹,

Feo²

2014

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We investigate competition for FDI within a region when a foreign multinational firm can profitably exploit differences in statutory corporate tax rates by shifting taxable profits to lower-tax jurisdictions. In such framework we show that targeted tax competition may lead to higher welfare for the region as a whole than lump-sum subsidies when the difference in statutory corporate tax rates and/or their average is high enough. Tax competition is also preferable from an efficiency point of view (overall surplus) by changing the firm's investment decision when profit shifting motivations induce the firm to locate in the (before tax) least profitable country.

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Section: Regional Welfare Implicationsmentioning

confidence: 97%

Section: Profits Of the Multinational Firmmentioning

confidence: 99%

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Competition for FDI and Profit Shifting: On the Effects of Subsidies and Tax Breaks

Amerighi¹,

Feo²

2014

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“…9 Direct externalities between principals typically lead to multiple equilibrium outcomes even in complete-information environments, as shown by Martimort and Stole (2003) and Segal and Whinston (2003). 10 This setting is analyzed by Chiesa and Denicolò (2009), who show that although the aggregate quantity traded in equilibrium always coincides with the first-best quantity, equilibrium transfers and payoffs are not uniquely determined. 11 Examples in this direction are provided by d 'Aspremont and Dos Santos Ferreira (2010), who provide a strategic analysis of competition between firms selling differentiated goods to a representative consumer under complete information, both in the cases of intrinsic and delegated agency.…”

Section: Theoretical Economics 9 (2014)mentioning

confidence: 99%

Non-Exclusive Competition Under Adverse Selection

2011

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. A seller of a divisible good faces several identical buyers. The quality of the good may be low or high, and is the seller's private information. The seller has strictly convex preferences that satisfy a single-crossing property. Buyers compete by posting menus of nonexclusive contracts, so that the seller can simultaneously and privately trade with several buyers. We provide a necessary and sufficient condition for the existence of a pure-strategy equilibrium. Aggregate equilibrium trades are unique. Any traded contract must yield zero profit. If a quality is actually traded, then it is efficiently traded. Depending on parameters, both qualities may be traded, or only one of them, or the market may break down to a no-trade equilibrium. Terms of use: Documents in EconStor may

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“…As is well known, the inclusion in the menu of "latent" contracts that are never selected in equilibrium may be essential to prevent deviations by other principals. See Gabriella Chiesa and Vincenzo Denicolo (2009) for an illustration. 9 While the definition of Markov strategy given here is different from the one considered in the literature on dynamic games (see, e.g., Pavan and Calzolari 2009), it shares with that definition the idea that the agent's behavior should depend only on payoff-relevant information.…”

Section: Truthful Revelation Mechanisms For Simultaneous Commonmentioning

confidence: 99%

Truthful Revelation Mechanisms for Simultaneous Common Agency Games

Pavan

Calzolari

2010

American Economic Journal: Microeconomics

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Many economic environments can be modelled as common agency games-that is, games where multiple principals contract simultaneously and noncooperatively with the same agent. 1Despite their relevance for applications, the analysis of these games has been made difficult by the fact that one cannot safely assume that the agent selects a contract with each principal by simply reporting his "type" (i.e., his exogenous payoff-relevant information). In other words, the central tool of mechanism design theory-the Revelation Principle-is invalid in these games. 2 The reason is that the agent's preferences over the contracts offered by one principal depend not only on his type, but also on the contracts he has been offered by the other principals. We refer to the players who offer the contracts either as the principals or as the mechanism designers. The two expressions are intended as synonyms. Furthermore, we adopt the convention of using feminine pronouns for the principals and masculine pronouns for the agent. Depending on the application of interest, a contract can be a price-quantity pair, as in the case of competion in nonlinear tariffs; a multidimensional bid, as in menu auctions; or an incentive scheme, as in moral hazard settings. * Pavan: Department of Economics, Northwestern University, 2001 Sheridan Road Arthur Andersen Hall 329 Evanston, IL 60208-2600 (e-mail: alepavan@northwestern.edu). Calzolari: Department of Economics University of Bologna, Piazza Scaravilli 2 40126 Bologna Italy and CEPR (e-mail: giacomo.calzolari@unibo.it). This is a substantial revision of an earlier paper that circulated under the same title. For useful discussions, we thank seminar participants at various conferences and institutions where this paper has been presented. A special thank is to Eddie Dekel, Mike Peters, Marciano Siniscalchi, Jean Tirole, and three anonymous referees for suggestions that helped us improve the paper. We are grateful to Itai Sher for excellent research assistance. For its hospitality, Pavan also thanks Collegio Carlo Alberto (Turin), where this project was completed.† To comment on this article in the online discussion forum, or to view additional materials, visit the articles page at http://www.

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Trading with a common agent under complete information: A characterization of Nash equilibria

Cited by 25 publications

References 21 publications

Competition for FDI and Profit Shifting: On the Effects of Subsidies and Tax Breaks

Competition for FDI and Profit Shifting: On the Effects of Subsidies and Tax Breaks

Non-Exclusive Competition Under Adverse Selection

Truthful Revelation Mechanisms for Simultaneous Common Agency Games

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