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Stationary equilibria in bargaining with externalities

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  • Björnerstedt, Jonas
  • Westermark, Andreas

Abstract

This paper studies infinite-horizon bargaining between a seller and multiple buyers when externalities are present. We extend the analysis in Jehiel and Moldovanu by allowing for both pure and mixed equilibria [Jehiel, P., Moldovanu, B., 1995a. Cyclical delay in bargaining with externalities. Rev. Econ. Stud. 62, 619-637]. A characterization of the stationary subgame perfect equilibria in generic games is presented. Equilibria with delay exist only for strong positive externalities. Since each buyer receives a positive payoff when the seller makes an agreement with some other buyer, positive externalities induce a war of attrition between buyers.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 65 (2009)
Issue (Month): 2 (March)
Pages: 318-338

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Handle: RePEc:eee:gamebe:v:65:y:2009:i:2:p:318-338

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Web page: http://www.elsevier.com/locate/inca/622836

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Keywords: Bargaining Externalities Delay;

References

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  1. Raquel Fernandez & Jacob Glazer, 1989. "Striking for a Bargain Between Two Completely Informed Agents," NBER Working Papers 3108, National Bureau of Economic Research, Inc.
  2. Jehiel, Philippe & Benny Moldovanu, 1993. "Cyclical Delay in Bargaining with "Externalities"," Discussion Paper Serie B 234, University of Bonn, Germany.
  3. Gomes, Armando R & Jehiel, Philippe, 2001. "Dynamic Processes of Social and Economic Interactions: On the Persistence of Inefficiencies," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3012, C.E.P.R. Discussion Papers.
  4. ehiel, Philippe & Benny Moldovanu & Ennio Stacchetti, 1994. "How (not) to sell nuclear weapons," Discussion Paper Serie B 288, University of Bonn, Germany.
  5. Bliss, Christopher & Nalebuff, Barry, 1984. "Dragon-slaying and ballroom dancing: The private supply of a public good," Journal of Public Economics, Elsevier, Elsevier, vol. 25(1-2), pages 1-12, November.
  6. Hendon, Ebbs & Tranaes, Torben, 1991. "Sequential bargaining in a market with one seller and two different buyers," Games and Economic Behavior, Elsevier, Elsevier, vol. 3(4), pages 453-466, November.
  7. Cramton, Peter C, 1992. "Strategic Delay in Bargaining with Two-Sided Uncertainty," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 59(1), pages 205-25, January.
  8. Mas-Colell,Andreu, 1985. "The Theory of General Economic Equilibrium," Cambridge Books, Cambridge University Press, number 9780521265140, 9.
  9. Cai, Hongbin, 2000. "Delay in Multilateral Bargaining under Complete Information," Journal of Economic Theory, Elsevier, Elsevier, vol. 93(2), pages 260-276, August.
  10. Armando Gomes, 2005. "Multilateral Contracting with Externalities," Econometrica, Econometric Society, Econometric Society, vol. 73(4), pages 1329-1350, 07.
  11. Jehiel, Philippe & Moldovanu, Benny, 1995. "Negative Externalities May Cause Delay in Negotiation," Econometrica, Econometric Society, Econometric Society, vol. 63(6), pages 1321-35, November.
  12. Westermark, Andreas, 2003. "Bargaining, binding contracts, and competitive wages," Games and Economic Behavior, Elsevier, Elsevier, vol. 43(2), pages 296-311, May.
  13. Admati, Anat R & Perry, Motty, 1987. "Strategic Delay in Bargaining," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 54(3), pages 345-64, July.
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Cited by:
  1. Bård Harstad, 2013. "The Market for Conservation and Other Hostages," CESifo Working Paper Series 4296, CESifo Group Munich.

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