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Multi-person bargaining with complementarity: Is there holdout?

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Author Info
Prabal Roy Chowdhury () (Indian Statistical Institute, New Delhi)
Kunal Sengupta (University of Sydney)

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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.

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Publisher Info
Paper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 08-10.

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Length: 31 pages
Date of creation: Jun 2008
Date of revision:
Handle: RePEc:ind:isipdp:08-10

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Related research
Keywords: Multi-person bargaining; holdout; complementarity; efficiency; Coase theorem;

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Find related papers by 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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  1. Okada, Akira, 1996. "A Noncooperative Coalitional Bargaining Game with Random Proposers," Games and Economic Behavior, Elsevier, vol. 16(1), pages 97-108, September. [Downloadable!] (restricted)
  2. Perry, M. & Rany, P., 1992. "A Non-Cooperative View of Coalition Formation and the Core," UWO Department of Economics Working Papers 9203, University of Western Ontario, Department of Economics.
    Other versions:
  3. Chatterjee, Kalyan & Bhaskar Dutta & Debraj Ray & Kunal Sengupta, 1993. "A Noncooperative Theory of Coalitional Bargaining," Review of Economic Studies, Blackwell Publishing, vol. 60(2), pages 463-77, April. [Downloadable!] (restricted)
  4. Gul, Faruk, 1989. "Bargaining Foundations of Shapley Value," Econometrica, Econometric Society, vol. 57(1), pages 81-95, January. [Downloadable!] (restricted)
  5. Ray, Debraj & Vohra, Rajiv, 1999. "A Theory of Endogenous Coalition Structures," Games and Economic Behavior, Elsevier, vol. 26(2), pages 286-336, January. [Downloadable!] (restricted)
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  6. Hart, Sergiu & Mas-Colell, Andreu, 1996. "Bargaining and Value," Econometrica, Econometric Society, vol. 64(2), pages 357-80, March. [Downloadable!] (restricted)
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  7. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January. [Downloadable!] (restricted)
  8. Chatterjee, Kalyan & Dutta, Bhaskar, 1998. "Rubinstein Auctions: On Competition for Bargaining Partners," Games and Economic Behavior, Elsevier, vol. 23(2), pages 119-145, May. [Downloadable!] (restricted)
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  13. Serrano Roberto, 1995. "A Market to Implement the Core," Journal of Economic Theory, Elsevier, vol. 67(1), pages 285-294, October. [Downloadable!] (restricted)
  14. Flavio Menezes & Rohan Pitchford, 2004. "A model of seller holdout," Economic Theory, Springer, vol. 24(2), pages 231-253, August. [Downloadable!] (restricted)
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