Negotiated Contracts Can Be Inefficient
The paper analyzes negotiation about contracts between the buyer and the seller. A contract specifies the quantity delivered by the seller and the buyer's payment for each period within its time horizon. In each period without a valid contract any party can withdraw from negotiation forever. Any strictly individually rational payoff vector obtainable from single period trade can be equilibrium payoff vector in some subgame perfect equilibrium if discount factor is close enough to one. Every sub game perfect equilibrium, in which neither party's strategy depends on past rejected proposals, is dynamically weakly Pareto efficient.
Volume (Year): 11 (2004)
Issue (Month): 20 ()
|Contact details of provider:|| Web page: http://ces.utia.cas.cz|
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:czx:journl:v:11:y:2004:i:20:id:134. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jozef Barunik)
If references are entirely missing, you can add them using this form.