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A model of delegated project choice with application to merger policy

Armstrong, M.; Vickers, J.; (2007) A model of delegated project choice with application to merger policy. (Discussion Papers in Economics 07-02). Department of Economics, University College London: London, UK. Green open access

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Abstract

We present a model in which a principal delegates the choice of project to an agent with different preferences. A project’s characteristics are verifiable once presented to the principal, but the principal does not know how many projects are available to the agent. The principal chooses the set of projects which the agent can implement. Three frameworks are considered: (i) a static setting in which the set of available projects is exogenous to the agent but uncertain; (ii) a dynamic setting in which by expending effort the agent can affect the number of projects, and (iii) a dynamic setting in which the agent must wait for projects to materialize. The model is applied to the choice of welfare standard for merger policy.

Type: Working / discussion paper
Title: A model of delegated project choice with application to merger policy
Open access status: An open access version is available from UCL Discovery
Publisher version: http://www.ucl.ac.uk/silva/economics/research/pape...
Language: English
Keywords: JEL classification: D82, D83, L40. Delegation, principal-agent, search, merger policy
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/7639
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