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Competitive Bargaining Equilibria

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  • Julio Dávila

    (CERMSEM - CEntre de Recherche en Mathématiques, Statistique et Économie Mathématique - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, University of Pennsylvania [Philadelphia])

  • Jan Eeckhout

    (University of Pennsylvania [Philadelphia])

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.

Suggested Citation

  • Julio Dávila & Jan Eeckhout, 2004. "Competitive Bargaining Equilibria," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-03330448, HAL.
  • Handle: RePEc:hal:cesptp:halshs-03330448
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-03330448
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    References listed on IDEAS

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    Cited by:

    1. 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.
    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. 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.
    4. Herings, P.J.J. & Houba, H, 2015. "Costless delay in negotiations," Research Memorandum 002, Maastricht University, Graduate School of Business and Economics (GSBE).
    5. Penta, Antonio, 2011. "Multilateral bargaining and Walrasian equilibrium," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 417-424.
    6. 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.

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    More about this item

    Keywords

    Alternating-offers bargaining; Walrasian equilibrium; Price-setting; quantity constraints; fixation de prix; contraintes sur les quantités; équilibre concurrentiel; négociation à des offres alternantes;
    All these keywords.

    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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