Cooperation between the littoral countries of the Baltic Sea to mitigate eutrophication has proven difficult in the past. In this study, we explore the countries’ incentives to free-ride on agreements, find stable coalitions where free-riding is deterred, and propose alternative ways of...

Abstract We develop a model of bilateral contracting in a dynamic market setting. Asset owners must be paired via a matching process in order to form productive relationships involving long-term investments and ongoing effort. Market frictions shape the owners' incentives to invest in the...

The optimal level of formalisation of contracts and their dynamic is at stake in the economic literature on the optimum design of ex post renegotiation with third party enforcement. Another theoretical interpretation is that contract adaptations may also reflect mutual learning process between...

We study a model in which agents endowed with power compete for a divisible resource by forming coalitions with other agents. The coalition with the greatest power wins the resource and divides it among its members via proportional sharing. We conduct an economic experiment using this model to...

This paper examines a general model of contract in multi-period settings with both external and self-enforcement. In the model, players alternately engage in contract negotiation and take individual actions. A notion of contractual equilibrium, which combines a bargaining solution and individual...