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Bargaining with Linked Disagreement Points

Author

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  • Justin Leroux
  • Walid Marrouch

Abstract

In the context of bilateral bargaining,we deal with issue linkage by developing a two-issue-two-players cooperative bargaining model. The axioms we propose focus on the role of the disagreement points. A family of bargaining rule stands out: the monotonic equal net ratio solutions. These solutions point to Pareto efficient outcomes such that the relative gains for players are equal across issues and reward the players for improving their bargaining power over each issue. We discuss our results in light of international trade and environmental negotiations, which are often put on the bargaining table in a linked fashion. Dans un contexte de négociations bilatérales, nous adressons la question de l'inter-connexion des sujets de négociation dans un modèle coopératif à deux-sujets-deux-agents. Les axiomes que nous proposons insistent sur le rôle des points de menace. Une famille de solutions ressort de l'analyse : les solutions monotones à taux nets identiques. Chacune de ces solutions préconise une issue Pareto efficace de sorte que les gains relatifs de chaque agent sont les mêmes pour les deux sujets de négociation. De plus, ces règles récompensent les agents pour des améliorations de leurs pouvoirs de négociation. Nous discutons nos résultats à la lumière des négociations de commerce international et environnementales, qui sont souvent amenées à la table de négociations de manière liée.

Suggested Citation

  • Justin Leroux & Walid Marrouch, 2011. "Bargaining with Linked Disagreement Points," CIRANO Working Papers 2011s-30, CIRANO.
  • Handle: RePEc:cir:cirwor:2011s-30
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    Keywords

    Multi-issue bargaining; issue linkages; axiomatic solutions; disagree-ment point. ; Négociations Multi-sujets; inter-connexion des sujets; solutions axiomatiques; point de Menace.;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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