Monopolistic Screening under Learning By Doing
Journal
RAND Journal of Economics
ISSN
0741-6261
Type
journal article
Date Issued
2010-08
Author(s)
Abstract
This article investigates the design of incentives in a dynamic adverse selection Framework where agents' production technologies display learning effects and agents' learning rates are private knowledge. In a simple two-period model with full commitment available to the principal we show that whether learning effects are over- or underexploited crucially depends on whether more effcient agents also learn faster (so costs diverge through learning effects) or whether it is the less effcient agents who learn faster (so costs converge). We further show that an overexploitation of learning effects can occur also if the full-commitment assumption is relaxed.
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Wiley Online Library
Volume
41
Number
3
Start page
574
End page
597
Pages
24
Subject(s)
Eprints ID
244892