In an oligopoly game with cost uncertainty and risk averse firms, we show that Bertrand and Cournot equilibrium have different convergence properties when the market is replicated. The Cournot equilibrium price converges to the competitive price. Under very typical and somewhat general...

We use the duality in linear programming to solva the problem of optimal partnership contracts with moral hazards. We show the importance of allowing the partners to have partial distribution of revenue under some contingencies. An optimal contract maximizes production efficiency minus the loss...

We give an example to show that efficiency in the principal-agent organization depends on the public information nature of the wage contracts. When wage contracts are private, the principal may have a moral hazard problem in deviating from some of the contracts, and efficiency need not hold even...

We provide extensions of the Bulow and Klemperer (1996) result when the seller has value for the object above the minimum value of the buyers. The result may fail. We show that the seller does better with more participation and some exclusion than the optimal exclusion of buyers of low value...

We show that when the weak bidder’s bargaining power in the resale market is weakened, the auctioneer’s revenue from the first-price auction with resale is lower. Using the idea of Coase Theorem, we show that when the resale market is a sequential bargaining model with no commitment, the...

A game with one-sided moral hazard is represented by a two-stage games. We give necessary and sufficient conditions for the folk theorem to hold. Equilibrium payoffs are generated by payoffs from pure strategy profiles which do not admit profitable nondetectable deviations. The enforceable...

We develop the theory of optimal auction design in a discrete bidding model. Examples show that many of the equivalence results or other well-known results may fail in an auction with discrete bidding. We show that the optimal auciton problem, however, has a similar solution. We formulate a...