Multi-principal Framework Motivate The Study Of Mechanisms

This article is concerned about the enterprises sharing of the industrial resources' supply, maintenance and use. How will the enterprises organize themselves for self-governance to get the long-lasting profit by avoiding behavior of the free-riding, avoiding responsibility or other opportunistic behavior? The article intends to discuss relations between the enterprises and trade association on the theory of common agency. The article tries to discuss in two parts. The first part discusses the incentive mechanism of the enterprises and trade association on basis of traditional theory. The second part discusses the incentive mechanism on the basis of common agency. In the second part there are two sub-parts which discuss the incentive mechanism respectively when the relationship between the clients is competition and cooperation.The thesis gets conclusion that: first of all, when all the enterprises act as a whole, the efficiency will get the first-best. But in reality it doesn't always exist. The principal-agent relationship between the enterprises and trade association must satisfy some conditions. The decision-making influences each other no matter the relationship between the enterprises. When the other conditions had been given, the efforts of trade association depend on the strength of incentives of all enterprises. And the intensity of incentives is a relationship that weakens each other. These hypothesizes are also supported by many realistic cases.