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Endogenous bargaining power

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  • Joan Esteban
  • József Sákovics

Abstract

We present a novel approach to N-person bargaining, based on the idea that the agreement reached in a negotiation is determined by how the direct conflict resulting from disagreement would be resolved. Our basic building block is the disagreement function, which maps each set of feasible outcomes into a disagreement point. Using this function and a weak axiom based on individual rationality we reach a unique solution: the agreement in the shadow of conflict, ASC. This agreement may be construed as the limit of a sequence of partial agreements, each of which is reached as a function of the parties' relative power in the non-cooperative scenario.

Suggested Citation

  • Joan Esteban & József Sákovics, 2003. "Endogenous bargaining power," Working Papers 13, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:13
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    References listed on IDEAS

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    Cited by:

    1. Omonbude, Ekpen J., 2007. "The transit oil and gas pipeline and the role of bargaining: A non-technical discussion," Energy Policy, Elsevier, vol. 35(12), pages 6188-6194, December.
    2. Santiago Sanchez-Pages, 2004. "Conflict as a Part of the Bargaining Process: Theory and Empirical Evidence," Edinburgh School of Economics Discussion Paper Series 129, Edinburgh School of Economics, University of Edinburgh.
    3. Santiago Sanchez-Pages, 2003. "The use of conflict as a bargaining tool against unsophisticated opponents," Edinburgh School of Economics Discussion Paper Series 99, Edinburgh School of Economics, University of Edinburgh.

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    More about this item

    Keywords

    Bargaining; conflict; disagreement;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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