David Martimort's research interests include contract theory and mechanism design, public-private partnerships, and public procurement. In terms of research output, he ranks among the top 1% of economists registered on IDEAS/RePEc.
Research on multiprincipal and common agency settings
One key idea in Martimort's research is the possibility of a common agent who contracts with multiple principals that each control one agent's activity. Martimort shows that in such a setting, the revelation principle fails to hold and only a weaker version - the equivalence principle - holds, with the results critically depending on the complementarity or substitutability of activities across principals. Martimort then applied multiprincipal incentive theory to supply chains, using it to explain why manufacturers' choice of common or exclusive retailers depends on the complementarity or substitutability of their brands, and government, where it is used to describe the shared control of entities by regulatory bodies as a set of competing contracts. Applying multi-principals and competing contracts to financial markets, Martimort, Bruno Biais and Jean-Charles Rochet develop a model that yields outcomes similar to those under imperfect competition, which however disappear as more competitors enter the market. Finally, in two studies with Lars Stole, Martimort shows that all common agency equilibria can be characterized by an extension of the taxation principle - the "delegation principle" - and how those equilibria are affected by direct externalities between principals under nonlinear price competition.
Another fertile area of Martimort's research is collusion, which he extensively explored with Jean-Jacques Laffont. Among else, they show under which conditions a principal can offer agents who collude under asymmetric information implementable collusion-proof contracts and how these contracts depend on their anonymity. They also show how the problem of collusion between agents in centralized organizations critically depends on the presence of limits to agents' communication, which creates a conflict between agents' participation and coalition incentive constraints, that "the separation of powers in regulation may act as a commitment against the threat of regulatory capture", and how principals can design collusion-proof mechanisms when agents' valuations are correlated. Together with Antoine Faure-Grimaud, they also explore how the value of supervision with soft information depends on the tendency of supervisees and supervisors to collunder under asymmetric information, with centralized and decentralized settings resulting in the same outcome. Finally, Martimort and Denis Gromb study how to design optimal incentive contracts for experts in different collusion environments, with important implications for the organization of delegated expertise.
In his research on regulatory institutions, Martimort argues that they create a framework for the repeated interactions between an interest group and a regulatory agency, and may mitigate the risk of regulatory capture depending on their time preferences, information and transaction costs. These general principles were then applied to the analysis of regulatory institutions in Latin America.
Research on public-private partnerships
A more recent area in Martimort's research is the theory of public-private partnerships. Together with Jerome Pouyet, Martimort analyzes whether the construction of public serviceinfrastructure and the management of that infrastructure should be bundled or not, arguing that PPPs may be advantageous if there is a positive externality, the private benefits from asset ownership are not too large, and the risk of regulatory capture is limited. In subsequent research with Elisabeth Iossa, Martimort further extends the analysis of benefits and costs of public-private partnerships by allowing for asymmetric information, moral hazard, and renegotiations as well as private or public financing.
