SHERP

Private Information and Endogenous Entry

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Authors
Barcena-Ruiz, Juan Carlos; Rubio, Jesus
Issue Date
2003
Publisher
Seoul Journal of Economics
Citation
Seoul Journal of Economics 16 (No. 4 2003): 491-501
Keywords
endogenous entry; Private information
Abstract
We assume an organization made up of a principal and an agent in which the agent privately observes the state of nature. The agent can use his private information to set up a new firm (endogenous entry) with a positive fixed cost. We show that, in equilibrium, there is effective endogenous entry If the cost of entry the agent must bear to establish a new firm is low enough, as the agent has better information about the state of nature than the principal.
ISSN
1225-0279
Language
English
URI
http://hdl.handle.net/10371/1306
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.16(4) (Winter 2003)
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