A dynamic trading game is examined in which two uninformed buyers engage in Bertrand-like competition to attempt to purchase a single object of uncertain quality from an informed seller. It is shown that there exists a unique perfect sequential equilibrium. The game is compared to an analogous bargaining game in which a single uninformed buyer makes offers to a single seller. Despite the fact that, in the equilibrium of the competitive game, buyers compete away their surplus, it is shown that sellers can often gain a higher ex ante surplus in the bargaining game. Copyright 1990 by The Review of Economic Studies Limited.
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Volume (Year): 57 (1990) Issue (Month): 1 (January) Pages: 49-61 Download reference. The following formats are available: HTML
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