Common Agency and Coordination: General Theory and Application to Government Policy Making

by: Avinash Dixit, Gene M Grossman, Elhanan Helpman

The Journal of Political Economy, Vol. 105, No. 4. (1997), pp. 752-769.

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Abstract

We develop a model of common agency with complete information and general preferences with nontransferable utility, and we prove that the principals' Nash equilibrium in truthful strategies implements an efficient action. We apply this theory to the construction of a positive model of public finance, where organized special interests can lobby the government for consumer and producer taxes or subsidies and targeted lump-sum taxes or transfers. The lobbies use only the nondistorting transfers in their noncooperative equilibrium, but their intergroup competition for transfers turns into a prisoners' dilemma in which the government captures all the gain that is potentially available to the parties.

@article{citeulike:2946790, abstract = {We develop a model of common agency with complete information and general preferences with nontransferable utility, and we prove that the principals' Nash equilibrium in truthful strategies implements an efficient action. We apply this theory to the construction of a positive model of public finance, where organized special interests can lobby the government for consumer and producer taxes or subsidies and targeted lump-sum taxes or transfers. The lobbies use only the nondistorting transfers in their noncooperative equilibrium, but their intergroup competition for transfers turns into a prisoners' dilemma in which the government captures all the gain that is potentially available to the parties.}, author = {Dixit, Avinash and Grossman, Gene M. and Helpman, Elhanan }, citeulike-article-id = {2946790}, doi = {http://dx.doi.org/10.2307/2138917}, journal = {The Journal of Political Economy}, keywords = {agency, contract, fiscal\_policy, policy, political\_economy}, number = {4}, pages = {752--769}, posted-at = {2008-07-01 07:45:55}, priority = {4}, publisher = {The University of Chicago Press}, title = {Common Agency and Coordination: General Theory and Application to Government Policy Making}, url = {http://dx.doi.org/10.2307/2138917}, volume = {105}, year = {1997} }

RIS record

TY - JOUR ID - citeulike:2946790 L3 - citeulike-article-id:2946790 TI - Common Agency and Coordination: General Theory and Application to Government Policy Making JF - The Journal of Political Economy VL - 105 IS - 4 SP - 752 EP - 769 PB - The University of Chicago Press N2 - We develop a model of common agency with complete information and general preferences with nontransferable utility, and we prove that the principals' Nash equilibrium in truthful strategies implements an efficient action. We apply this theory to the construction of a positive model of public finance, where organized special interests can lobby the government for consumer and producer taxes or subsidies and targeted lump-sum taxes or transfers. The lobbies use only the nondistorting transfers in their noncooperative equilibrium, but their intergroup competition for transfers turns into a prisoners' dilemma in which the government captures all the gain that is potentially available to the parties. KW - agency KW - contract KW - fiscal_policy KW - policy KW - political_economy AU - Dixit, Avinash AU - Grossman, Gene AU - Helpman, Elhanan PY - 1997/// UR - http://dx.doi.org/10.2307/2138917 ER -

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