Competitive Bargaining Equilibrium
AbstractWe propose a simple bargaining procedure, the equilibrium of which converges to the Walrasian allocation as the agents become increasingly patient. We thus establish that the competitive outcome obtains even if agents have market power and are not price-takers. Moreover, where in other bargaining protocols the final outcome depends on bargaining power or relative impatience, the outcome here is determinate and depends only on preferences and endowments. This procedure has therefore important implications for policy applications compared to standard bargaining rules.
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Bibliographic InfoPaper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 04-024.
Length: 38 pages
Date of creation: 01 May 2004
Date of revision:
Bargaining; Walrasian Equilibrium; Price-setting; Quantity Constraints; Search; Matching;
Other versions of this item:
- DAVILA, Julio & EECKHOUT, Jan, . "Competitive bargaining equilibrium," CORE Discussion Papers RP -2069, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Julio Davila & Jan Eeckhout, 2004. "Competitive Bargaining Equilibria," Cahiers de la Maison des Sciences Economiques b04067, Université Panthéon-Sorbonne (Paris 1).
- C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
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