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Multi-person bargaining with complementarity: Is there holdout?

Author

Listed:
  • Prabal Roy Chowdhury

    (Indian Statistical Institute, New Delhi)

  • Kunal Sengupta

    (University of Sydney)

Abstract

This paper studies a non-cooperative bargaining problem with one buyer and many sellers, focussing on the tension between the complementarity intrinsic to such a setup and efficiency. We address this problem in a very general setup with a technology that allows for variable degrees of complementarity, a bargaining protocol that is symmetric and allows for both secret, as well as publicly observable offers, and strategies that allow for history dependence. We examine equilibria for all parameter values. Interestingly, and in contrast to most of the literature, we demonstrate that there is a large class of parameter values such that an asymptotically efficient equilibrium with a positive buyer payoff exists - thus demonstrating that strategic holdout is not a serious obstacle to the working of the Coase theorem. For robustness we examine alternative contractual forms, i.e. conditional and equity contracts, as well as variations that allow for multiple project implementation and asymmetric sellers.

Suggested Citation

  • Prabal Roy Chowdhury & Kunal Sengupta, 2008. "Multi-person bargaining with complementarity: Is there holdout?," Discussion Papers 08-10, Indian Statistical Institute, Delhi.
  • Handle: RePEc:alo:isipdp:08-10
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    File URL: http://www.isid.ac.in/~pu/dispapers/dp08-10.pdf
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    References listed on IDEAS

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    Cited by:

    1. Jun Xiao, 2012. "Bargaining Order in a Multi-Person Bargaining Game," Department of Economics - Working Papers Series 1150, The University of Melbourne.

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    More about this item

    Keywords

    Multi-person bargaining; holdout; complementarity; efficiency; Coase theorem;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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