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Breakdown in multilateral negotiations

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  • Göller, Daniel
  • Hewer, Michael

Abstract

We analyze a complete information multilateral bargaining model in which a buyer is to purchase two complementary goods from two sellers. Binding cash-offer contracts are used to govern transactions. In contrast to preexisting literature, we do not normalize the parties' reservation utilities to zero. We show that this assumption holds critical importance by demonstrating that a complete breakdown of negotiations may occur as the unique equilibrium outcome, even if only two sellers are present.

Suggested Citation

  • Göller, Daniel & Hewer, Michael, 2015. "Breakdown in multilateral negotiations," Journal of Economic Theory, Elsevier, vol. 157(C), pages 478-484.
  • Handle: RePEc:eee:jetheo:v:157:y:2015:i:c:p:478-484
    DOI: 10.1016/j.jet.2015.01.013
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    Cited by:

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    4. Soumendu Sarkar, 2022. "Strategyproof and Budget Balanced Mechanisms for Assembly," Working papers 320, Centre for Development Economics, Delhi School of Economics.

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    More about this item

    Keywords

    Multilateral bargaining; Complete information; Breakdown; Coase theorem;
    All these keywords.

    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

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