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Bargaining with asymmetric information in non-stationary markets

Author

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  • Daniel Trefler

    (Department of Economics, University of Toronto, Toronto, M5S 3G7, CANADA)

Abstract

The Rubinstein and Wolinsky bargaining-in-markets framework is modified by the introduction of asymmetric information and non-stationarity. Non-stationarity is introduced in the form of an arbitrary stochastic Markov process which captures the dynamics of market entry and pairwise matching. A new technique is used for establishing existence and characterizing the unique outcome of a non-stationary market equilibrium. The impact of market supply and demand on bilateral bargaining outcomes and matching probabilities is explored. The results are useful for examining such questions as why coordination failures and macroeconomic output fluctuations are correlated with real and monetary shocks.

Suggested Citation

  • Daniel Trefler, 1999. "Bargaining with asymmetric information in non-stationary markets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 13(3), pages 577-601.
    • Handle: RePEc:spr:joecth:v:13:y:1999:i:3:p:577-601
    Note: Received: July 22, 1994; revised version: January 21, 1998
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    Cited by:

    1. Ahmet Ozkardas & Agnieszka Rusinowska, 2013. "An application of wage bargaining to price negotiation with discount factors varying in time," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00881151, HAL.

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