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Vertical integration through Rubinstein bargaining

Author

Listed:
  • Derek J Clark

    (Tromsø University Business School, University of Tromsø)

  • Jean-Christophe Pereau

    (Gretha, Université de Bordeaux IV)

Abstract

We consider a vertical structure in which an upstream manufacturer bargains with a downstream retailer over the price of an intermediate good. In an alternating offers framework, we show that when the managers of the firms can choose their response time in the negotiation that the solution conforms either to the non-intergrated or fully integrated structure from standard models of successive monopoly.

Suggested Citation

  • Derek J Clark & Jean-Christophe Pereau, 2012. "Vertical integration through Rubinstein bargaining," Economics Bulletin, AccessEcon, vol. 32(3), pages 2522-2529.
    • Handle: RePEc:ebl:ecbull:eb-12-00585
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    References listed on IDEAS

    as
    1. repec:bla:scandj:v:88:y:1986:i:2:p:383-400 is not listed on IDEAS
    2. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    3. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "Wage Bargaining with On-the-Job Search: Theory and Evidence," Econometrica, Econometric Society, vol. 74(2), pages 323-364, March.
    4. Peter C. Cramton, 1992. "Strategic Delay in Bargaining with Two-Sided Uncertainty," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(1), pages 205-225.
    5. Sakovics Jozsef, 1993. "Delay in Bargaining Games with Complete Information," Journal of Economic Theory, Elsevier, vol. 59(1), pages 78-95, February.
    6. Bonnie G. Colby, 1995. "Bargaining Over Agricultural Property Rights," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(5), pages 1186-1191.
    7. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer.
    8. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, Enero-Abr.
    9. Anat R. Admati & Motty Perry, 1987. "Strategic Delay in Bargaining," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(3), pages 345-364.
    10. Perry Motty & Reny Philip J., 1993. "A Non-cooperative Bargaining Model with Strategically Timed Offers," Journal of Economic Theory, Elsevier, vol. 59(1), pages 50-77, February.
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    Keywords

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    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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