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Optimal Influence Sale

Author

Listed:
  • Seung Han Yoo

    (Department of Economics, Korea University, Seoul, Republic of Korea 136-701)

Abstract

A principal sells an influence to firms that may undertake a project, through collusion with a seller of some item. For the optimal sale of influence, the principal chooses an influence level for a losing firm above the default level, while treating a winning firm even more favorably. Furthermore, the difference in influence between two firms does not change monotonically, and under some parameters, even the set of firm types participating in the sale is larger. The optimal mechanism highlights the cashing-out process of public resources by the principal, which comes at the cost of public welfare.

Suggested Citation

  • Seung Han Yoo, 2020. "Optimal Influence Sale," Discussion Paper Series 2002, Institute of Economic Research, Korea University.
    • Handle: RePEc:iek:wpaper:2002
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    File URL: http://econ.korea.ac.kr/~ri/WorkingPapers/w2002.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Sale of influence; collusion; optimal mechanism;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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