Values of games without side payments

1971 ◽  
Vol 1 (1) ◽  
pp. 95-109 ◽  
Author(s):  
G. Owen
Keyword(s):  
Side Payments

Harmonization and Side Payments in Political Cooperation

2007 ◽  
Vol 97 (3) ◽  
pp. 871-889 ◽  
Author(s):  
Bård Harstad
Keyword(s):  
Private Information ◽  
Fiscal Federalism ◽  
Theoretical Foundation ◽  
Bargaining Game ◽  
Local Conditions ◽  
Side Payments ◽  
Political Cooperation ◽  
Political Centralization ◽  
Decentralized Cooperation

For two districts or countries that try to internalize externalities, I analyze a bargaining game under private information. I derive conditions for when it is efficient with uniform policies across regions—with and without side payments—and when it is efficient to prohibit side payments in the negotiations. While policy differentiation and side payments allow the policy to better reflect local conditions, they create conflicts between the regions and, thus, delay. The results also describe when political centralization outperforms decentralized cooperation, and they provide a theoretical foundation for the controversial “uniformity assumption” traditionally used by the fiscal federalism literature. (JEL C78, D72, D82, H77)

THE FIRM AS A NEXUS OF STRATEGIES

2004 ◽  
Vol 06 (04) ◽  
pp. 525-554
Author(s):  
GREGORY K. DOW
Keyword(s):  
Repeated Game ◽  
Standard View ◽  
Team Members ◽  
Technology Firms ◽  
Outside Options ◽  
Side Payments ◽  
Input Demand ◽  
General Production ◽  
Production Technologies ◽  
Incentive Constraint

This paper replaces the standard view of the firm as a nexus of contracts with a repeated game framework where input contributions and side payments are self-enforced. General production technologies and flexible transfers among team members are allowed. When an incentive constraint binds, input demand and output supply are influenced by the discount factor, the probability of exogenous team dissolution, and the aggregate value of outside options. When this incentive constraint does not bind, the firm maximizes profit in the usual way. I discuss examples involving the Cobb-Douglas technology, firms with a single residual claimant, and partnerships.

Credibility, Costs, and Institutions: Cooperation on Economic Sanctions

1993 ◽  
Vol 45 (3) ◽  
pp. 406-432 ◽  
Author(s):  
Lisa L. Martin
Keyword(s):  
International Cooperation ◽  
International Institutions ◽  
Practical Interest ◽  
Economic Sanctions ◽  
Credible Commitments ◽  
Issue Linkage ◽  
Audience Costs ◽  
Free Ride ◽  
Side Payments ◽  
Issue Linkages

The conditions under which states will cooperate to impose economic sanctions are of both theoretical and practical interest. Generally, when sanctions are used, one state takes the lead in organizing and imposing them. Other states have incentives to free ride on the “leading sender's” efforts. To gain cooperation, the leading sender uses tactical issue-linkage in the form of either threats or side payments. The success of cooperation depends on the credibility of these issue-linkages. The use of high-cost sanctions and international institutions raises the potential for high audience costs if the leading sender reneges. These policies thus indicate credible commitments. Data on ninety-nine cases of post-1945 economic sanctions show that costly measures coincide with high levels of international cooperation.

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