| This dissertation consists of three essays. It addresses the question of how to model competition for two-sided economic problems. The first chapter studies the bilateral contracting environment where multiple principals negotiate contracts with multiple agents independently. It is shown that equilibrium allocations associated with (pure strategy) perfect Bayesian equilibria relative to any ad hoc set of negotiation schemes can be supported by pure strategy perfect Bayesian equilibria relative to the set of menus. It is also shown that equilibrium allocations associated with all perfect Bayesian equilibria relative to any ad hoc set of negotiation schemes can be supported by correlated equilibria relative to the set of menus, where the set of states is simply the set of feasible probability distributions over payoff-relevant variables. Moreover, equilibrium allocations associated with all equilibria relative to the set of menus persist even if principals use more complex negotiation schemes.; The second chapter studies investment problems in a large matching market in which firms and workers have multidimensional characteristics and wage is a part of the firm's characteristic. It uncovers under what conditions competition for a better partner by itself can induce fully efficient investments without market returns to investments. The conditions are (a) benefits and costs of investments are separable, (b) everyone has the same preferences over characteristics at least on one side of the market, and (c) benefit functions are weakly supermodular and cost functions are strictly supermodular.; The Internet industry has realized the importance of provisioning different quality of service to different applications. The last chapter proposes integrated differentiated services, a pair of a network architecture and a pricing scheme, that achieves the efficient throughput allocation without significant queue management or real-time pricing costs. Integrated differentiated services integrates networks into a single network in an economy and allows endusers to submit packets to many networks. In equilibrium, each network posts any price for a submitted packet over time by virtue of the revenue equivalence property. |
