Many real world transactions occur in a common agency environment in which an agent interacts with several principals having competing interests. The hold-up literature, however, has so far neglected to investigate common agency transactions. In this paper, we consider the hold-up problem that...

Contrary to previous literature, we show that the assignment of authority decision matters in optimal contract design with bilateral specific self-investments. This is the case when we enlarge the set of the states of nature, to explicitly consider the event that a party's market option turns...

Much productive activity that once took place within a single firm now occurs when two firms collaborate to produce a new product such as a drug or software program. The agreements that govern these collaborations are not enforceable contracts; they lack standard terms such as prices and...