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Competitive bargaining equilibrium

Author

Listed:
  • DAVILA, Julio
  • EECKHOUT, Jan

Abstract

We propose a simple bargaining procedure, the equilibrium of which converges to the Walrasian allocation as the agents become increasingly patient. We thus establish that the competitive outcome obtains even if agents have market power and are not price-takers. Moreover, where in other bargaining protocols the final outcome depends on bargaining power or relative impatience, the outcome here is determinate and depends only on preferences and endowments. This procedure has therefore important implications for policy applications compared to standard bargaining rules.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • DAVILA, Julio & EECKHOUT, Jan, 2009. "Competitive bargaining equilibrium," LIDAM Reprints CORE 2069, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2069
    DOI: 10.1016/j.jet.2007.03.001
    Note: In : Journal of Economic Theory, 139, 269-294, 2008
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    2. Anne van den Nouweland & Agnieszka Rusinowska, 2020. "Bargaining foundation for ratio equilibrium in public‐good economies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(2), pages 302-319, April.
    3. P. Jean-Jacques Herings & Harold Houba, 2022. "Costless delay in negotiations," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 74(1), pages 69-93, July.
    4. Julio Dávila & Jan Eeckhout & César Martinelli, 2009. "Bargaining over Public Goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(6), pages 927-945, December.
    5. Alon, Shiri & Lehrer, Ehud, 2019. "Competitive equilibrium as a bargaining solution: An axiomatic approach," Games and Economic Behavior, Elsevier, vol. 118(C), pages 60-71.
    6. Penta, Antonio, 2011. "Multilateral bargaining and Walrasian equilibrium," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 417-424.
    7. Jacek B. Krawczyk & Mabel Tidball, 2016. "Economic Problems with Constraints: How Efficiency Relates to Equilibrium," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 18(04), pages 1-19, December.

    More about this item

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies

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