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Cyclical Delay in Bargaining with Externalities

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  • Philippe Jehiel
  • Benny Moldovanu

Abstract

Externalities between buyers are shown to induce delays in negotiations between a seller and several buyers. Delays arise in a perfect and complete information setting with random matching even when there is no deadline. While with a deadline we identify delays both for positive and negative externalities, without a deadline we find that (1) when externalities are positive, there exists no SPNE in pure strategies with bounded recall that exhibits delay; (2) when externalities are negative, it may happen that all SPNE with bounded recall have the property that long periods of waiting alternate with short periods of activity: This is the cyclical delay phenomenon.

Suggested Citation

  • Philippe Jehiel & Benny Moldovanu, 1995. "Cyclical Delay in Bargaining with Externalities," Review of Economic Studies, Oxford University Press, vol. 62(4), pages 619-637.
  • Handle: RePEc:oup:restud:v:62:y:1995:i:4:p:619-637.
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    File URL: http://hdl.handle.net/10.2307/2298080
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    Cited by:

    1. Björnerstedt, Jonas & Westermark, Andreas, 2006. "Bargaining and Strategic Discrimination," Working Paper Series 2006:6, Uppsala University, Department of Economics.
    2. Breinlich, Holger & Nocke, Volker & Schutz, Nicolas, 2013. "Cross-Border Price Effects of Mergers and Acquisitions -- A Quantitative Framework for Competition Policy," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79837, Verein für Socialpolitik / German Economic Association.
    3. Testa, Cecilia, 2003. "Government corruption and legislative procedures: is one chamber better than two?," LSE Research Online Documents on Economics 6642, London School of Economics and Political Science, LSE Library.
    4. Björnerstedt, Jonas & Westermark, Andreas, 2006. "Delay in Bargaining with Externalities," Working Paper Series 2006:29, Uppsala University, Department of Economics.
    5. Bettina Klose & Dan Kovenock, 2015. "The all-pay auction with complete information and identity-dependent externalities," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(1), pages 1-19, May.
    6. Bester, Helmut & Konrad, Kai A., 2004. "Delay in contests," European Economic Review, Elsevier, vol. 48(5), pages 1169-1178, October.
    7. P. Manzini & C. Ponsati, 2006. "Stakeholder bargaining games," International Journal of Game Theory, Springer;Game Theory Society, vol. 34(1), pages 67-77, April.
    8. Calvo-Armengol, Antoni, 1999. "A note on three-player noncooperative bargaining with restricted pairwise meetings," Economics Letters, Elsevier, vol. 65(1), pages 47-54, October.
    9. Thành Nguyen & Vijay Subramanian & Randall Berry, 2016. "Delay in Trade Networks," Operations Research, INFORMS, vol. 64(3), pages 646-661, June.
    10. Manzini, Paola & Ponsati, Clara, 2005. "Stakeholders in bilateral conflict," Mathematical Social Sciences, Elsevier, vol. 50(2), pages 166-180, September.
    11. Shingo Ishiguro, 2010. "Holdup, search, and inefficiency," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 44(2), pages 307-338, August.
    12. Philippe Jehiel, 1998. "Enchères et externalités," Économie et Prévision, Programme National Persée, vol. 132(1), pages 83-92.
    13. Neeman, Zvika & Orosel, Gerhard O., 2006. "On the efficiency of vote buying when voters have common interests," International Review of Law and Economics, Elsevier, vol. 26(4), pages 536-556, December.
    14. Jonas Björnerstedt & Andreas Westermark, 2009. "The inefficiency of price quantity bargaining," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(2), pages 301-332, August.
    15. Gomes, Armando, 2015. "Multilateral negotiations and formation of coalitions," Journal of Mathematical Economics, Elsevier, vol. 59(C), pages 77-91.
    16. Calabuig, Vicent & Cunyat, Antoni & Olcina, Gonzalo, 2004. "Partially revocable commitments in a negotiation with a deadline," Research in Economics, Elsevier, vol. 58(4), pages 371-380, December.
    17. Moller, Marc, 2007. "The timing of contracting with externalities," Journal of Economic Theory, Elsevier, vol. 133(1), pages 484-503, March.
    18. Björnerstedt, Jonas & Westermark, Andreas, 2009. "Stationary equilibria in bargaining with externalities," Games and Economic Behavior, Elsevier, vol. 65(2), pages 318-338, March.
    19. Chowdhury, Prabal Roy, 1998. "Externalities and bargaining disagreement," Economics Letters, Elsevier, vol. 61(1), pages 61-65, October.
    20. Genicot, Garance & Ray, Debraj, 2006. "Contracts and externalities: How things fall apart," Journal of Economic Theory, Elsevier, vol. 131(1), pages 71-100, November.
    21. Britz, Volker & Herings, P. Jean-Jacques & Predtetchinski, Arkadi, 2015. "Delay, multiplicity, and non-existence of equilibrium in unanimity bargaining games," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 192-202.
    22. Galasso, Alberto, 2010. "Over-confidence may reduce negotiation delay," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 716-733, December.
    23. Sempere-Monerris, José J. & Vannetelbosch, Vincent J., 1997. "Bargaining with Externalities: Licensing of an Innovation," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1997007, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    24. Harstad, Bård, 2016. "The market for conservation and other hostages," Journal of Economic Theory, Elsevier, vol. 166(C), pages 124-151.

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