Felli, Leonardo and Villas-Boas, J.M. (1996) Friendships in vertical relations. . Suntory and Toyota International Centres for Economics and Related Disciplines, London, UK.
Full text not available from this repository.Abstract
It has been argued that collusion among the members of an organization or a vertical structure creates efficiency losses, and hence should be prevented. This paper shows that whenever collusion takes the form of co-insurance agreements, here called ?friendships?, among the members of a vertical structure this may not be the case. Indeed, in such a case, collusion yields only a redistribution of surplus among the members of the vertical structure. Hence, its efficiency costs may be reduced by allowing these ?friendships? to take place, rather than preventing them, and accounting for the redistribution in the design of the optimal incentive scheme.
| Item Type: | Monograph (Discussion Paper) |
|---|---|
| Official URL: | http://sticerd.lse.ac.uk/ |
| Additional Information: | © 1996 Leonardo Felli, J M Villas-Boas |
| Divisions: | Financial Markets Group STICERD Economics |
| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor |
| Date Deposited: | 28 Feb 2008 |
| Last Modified: | 13 Sep 2024 19:37 |
| URI: | http://eprints.lse.ac.uk/id/eprint/3600 |
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