The most-favored nation rule in club enlargement negotiation
We study the effects of the Most-Favored Nation rule in an applicant's negotiation to join a club. When the applicant has to carry out a series of bilateral bargains with the existing members, we find that there are two effects of the MFN rule, viz. the hardened bargainer effect and the free-rider effect. The former effect tends to favor the applicant, while the latter effect tends to hurt the applicant. We find that the free-rider effect is stronger the more asymmetric are the members. The hardened bargainer effect is stronger the larger is the "size of the pie." As the number of members increase, it is more likely that the hardened bargainer effect would dominate.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.dallasfed.org/|
More information through EDIRC
|Order Information:|| Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Grossman, Gene & Helpman, Elhanan, 1993.
"Protection for Sale,"
CEPR Discussion Papers
827, C.E.P.R. Discussion Papers.
- Gene M. Grossman & Elhanan Helpman, 1992. "Protection For Sale," NBER Working Papers 4149, National Bureau of Economic Research, Inc.
- Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
- Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 162, Princeton, Woodrow Wilson School - Public and International Affairs.
- Sang-Chul Suh & Quan Wen, 2003.
"Multi-Agent Bilateral Bargaining with Endogenous Protocol,"
Vanderbilt University Department of Economics Working Papers
0305, Vanderbilt University Department of Economics.
- Quan Wen & Sang-Chul Suh, 2004. "Multi-Agent Bilateral Bargaining with Endogenous Protocol," Econometric Society 2004 North American Winter Meetings 394, Econometric Society.
- Quan Wen & Sang-Chul Suh, 2004. "Multi-Agent Bilateral Bargaining with Endogenous Protocol," Econometric Society 2004 Far Eastern Meetings 405, Econometric Society.
- Suh, Sang-Chul & Wen, Quan, 2006.
"Multi-agent bilateral bargaining and the Nash bargaining solution,"
Journal of Mathematical Economics,
Elsevier, vol. 42(1), pages 61-73, February.
- Sang-Chul Suh & Quan Wen, 2003. "Multi-Agent Bilateral Bargaining and the Nash Bargaining Solution," Vanderbilt University Department of Economics Working Papers 0306, Vanderbilt University Department of Economics.
- Saggi, Kamal, 2009. "The MFN clause, welfare, and multilateral cooperation between countries of unequal size," Journal of Development Economics, Elsevier, vol. 88(1), pages 132-143, January.
- Ariel Rubinstein, 2010.
"Perfect Equilibrium in a Bargaining Model,"
Levine's Working Paper Archive
661465000000000387, David K. Levine.
- Rodney D. Ludema, 1991. "International Trade Bargaining And The Most-Favored-Nation Clause," Economics and Politics, Wiley Blackwell, vol. 3(1), pages 1-20, 03.
- Krishna, Vijay & Serrano, Roberto, 1996. "Multilateral Bargaining," Review of Economic Studies, Wiley Blackwell, vol. 63(1), pages 61-80, January.
- Cooper, Thomas E. & Fries, Timothy L., 1991. "The most-favored-nation pricing policy and negotiated prices," International Journal of Industrial Organization, Elsevier, vol. 9(2), pages 209-223, June.
- Horn, H. & Wolinsky, A., 1988.
"Bilateral Monopolies And Incentives For Merger,"
410, Stockholm - International Economic Studies.
- Chae Suchan & Yang Jeong-Ae, 1994. "An N-Person Pure Bargaining Game," Journal of Economic Theory, Elsevier, vol. 62(1), pages 86-102, February.
- Thomas E. Cooper, 1986. "Most-Favored-Customer Pricing and Tacit Collusion," RAND Journal of Economics, The RAND Corporation, vol. 17(3), pages 377-388, Autumn.
- Horn, Henrik & Mavroidis, Petros C., 2001.
"Economic and legal aspects of the Most-Favored-Nation clause,"
European Journal of Political Economy,
Elsevier, vol. 17(2), pages 233-279, June.
- Horn, Henrik & Mavroidis, Petros C, 2001. "Economic and Legal Aspects of the Most Favoured Nation Clause," CEPR Discussion Papers 2859, C.E.P.R. Discussion Papers.
When requesting a correction, please mention this item's handle: RePEc:fip:feddwp:0815. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Chapman)
If references are entirely missing, you can add them using this form.