Participation constraints in discontinuous adverse selection models

David Martimort, Lars A. Stole

We present a set of necessary and sufficient conditions for a class of optimal control problems with pure state constraints for which the objective function is linear in the state variable but the objective function is only required to be upper semicontinuous in the control variable. We apply those conditions to economic environments in contract theory where discontinuities in objectives prevail. Examples of applications include nonlinear pricing of digital goods and nonlinear pricing under competitive threat.

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Year of publication:	2022
Authors:	Martimort, David ; Stole, Lars A.
Published in:	Theoretical economics : TE ; an open access journal in economic theory. - Toronto : [Verlag nicht ermittelbar], ISSN 1555-7561, ZDB-ID 2220447-7. - Vol. 17.2022, 3, p. 1145-1181
Subject:	convex analysis \| nonsmooth optimization \| Optimal control \| principal–agent models \| type-dependent participation constraints \| Theorie \| Theory \| Adverse Selektion \| Adverse selection \| Prinzipal-Agent-Theorie \| Agency theory \| Mathematische Optimierung \| Mathematical programming

Type of publication:	Article
Type of publication (narrower categories):	Aufsatz in Zeitschrift ; Article in journal
Language:	English
Other identifiers:	10.3982/TE3030 [DOI] hdl:10419/296382 [Handle]
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10013327119