In bargaining between two sellers and one buyer on prices and quantities, strategic inefficiencies arise. By reallocating between the last agreement and the first, the buyer can increase it's share of the surplus. With symmetric sellers producing substitutes, the quantities in the first agreement will be higher than the efficient, and lower than the efficient in the last, implying that sellers are strategically discriminated. In equilibrium when the sellers produce substitutes, the buyer agrees first with the seller with lowest marginal cost. Efficiency is decreasing in the symmetry of the sellers and in the relative bargaining power of the sellers.
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Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number
2006:6.
Length: 36 pages Date of creation: 08 Feb 2006 Date of revision: Handle: RePEc:hhs:uunewp:2006_006
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Find related papers by JEL classification: C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Other versions:
Jonas Björnerstedt & Johan Stennek, 2001.
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CIG Working Papers
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