Dynamic contracting under adverse selection and renegotiation
Carregando...
Arquivos
Data
2017
Autores
Orientador(res)
Métricas
Título da Revista
ISSN da Revista
Título de Volume
Resumo
We study the effects of renegotiation in an infinitely-repeated screening model with long-term contracts. We propose a simple and tractable recursive formulation to study equilibria in which the monopolist's profit is maximized after every history. We show that the monopolist sequentially screens high-type consumers and characterize second-degree price discrimination policies. The monopolist's ability to extract rent from high-type consumers by distorting the allocation of low-type consumers vanishes as all parties become more patient. As a result, all distortions disappear and the allocation becomes efficient. © 2017 Elsevier Inc.