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Equilibrium and Renegotiation . . .

By Michele Polo and Piero Tedeschi


We propose a general formal structure for symmetric information delegation games that encompasses many existing economic applications in the elds of oligopoly theory, the theory of the rm, strategic trade policy and international political economy. Weprove that all individually rational allocations are implementable in delegation games with non separable utility. Secondly,we show that contract renegotiation and non observable contracts have similar e ects only in particular cases. We prove that all the equilibria obtained when renegotiation is excluded are implementable as renegotiation proof equilibria, provided that the side transfer technology implies a dead-weight loss increasing in the size of the transfer

Topics: JEL, C72, L22 Keywords, Delegation, Renegotiation
Year: 1997
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