Games played in a contracting environment

We analyze normal form games where a player has to pay a price to a supplier in order to play a speci…c action. Our focus is on supplier competition, arising from the fact that distinct suppliers supply different players, and possibly di¤erent actions of the same player. With private contracts, where a player only observes the prices quoted by his own suppliers, the set of equilibrium distributions over player actions coincides with the set of equilibrium distributions when all actions are supplied competitively, at cost. With public contracts, the two distributions di¤er dramatically even in simple games. Keywords: multi-party contracting, marginal contributions, perfect substitutes, perfect complements. JEL Classi…cation Nos: C73, L13, L14. I am grateful to Larry Samuelson, Ilya Segal, an anonymous referee and an associate editor for their helpful comments.