Roy Chowdhury, Prabal and Sengupta, Kunal (2008): Multi-person Bargaining With Complementarity: Is There Holdout?
Download (248kB) | Preview
This paper studies a non-cooperative bargaining problem with one buyer and many sellers, focussing on the tension between the complementarity intrinsic to such a setup and efficiency. We address this problem in a very general setup with a technology that allows for variable degrees of complementarity, a bargaining protocol that is symmetric and allows for both secret, as well as publicly observable offers, and strategies that allow for history dependence. We examine equilibria for all parameter values. Interestingly, and in contrast to most of the literature, we demonstrate that there is a large class of parameter values such that an asymptotically efficient equilibrium with a positive buyer payoff exists - thus demonstrating that strategic holdout is not a serious obstacle to the working of the Coase theorem. For robustness we examine alternative contractual forms, i.e. conditional and equity contracts, as well as variations that allow for multiple project implementation and asymmetric sellers.
|Item Type:||MPRA Paper|
|Original Title:||Multi-person Bargaining With Complementarity: Is There Holdout?|
|Keywords:||Multi-person bargaining, holdout, complementarity, efficiency, Coase theorem|
|Subjects:||D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior; Transaction Costs; Property Rights
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships; Contracts and Reputation; Networks
D - Microeconomics > D6 - Welfare Economics > D62 - Externalities
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C78 - Bargaining Theory; Matching Theory
|Depositing User:||Prabal Roy Chowdhury|
|Date Deposited:||12. Nov 2008 10:52|
|Last Modified:||12. Feb 2013 11:42|
ASAMI, Y. (1988), “A Game-theoretic Approach to the Division of Profits from Economic Land Development”, Regional Science and Urban Economics, 18, 233-246.
BENSON, B.L. (2005), “The Mythology of Holdout as a Justification for Eminent Domain and Public Provision of Roads”, The Independent Review, 10, 165-194.
BLOCH, F. (1996), “Sequential Formation of Coalitions in Games with Externalities and Fixed Payoff Division”, Games and Economic Behavior, 14, 90-123.
CAI, H. (2000), “Delay in Multilateral Bargaining under Complete Information”, Journal of Economic Theory, 93, 260-276.
CAI, H. (2003), “Inefficient Markov Perfect Equilibria in Multilateral Bargaining”, Economic Theory, 22, 583-606.
CHATTERJEE, K., DUTTA, B., SENGUPTA, K., RAY, D. (1993), “A Noncooperative Theory of Coalitional Bargaining”, Review of Economic Studies, 60, 463-477.
CHATTERJEE, K. and DUTTA, B. (1998), “Rubinstein Auctions: On Competition for Bargaining Partners”, Games and Economic Behavior, 23, 119-145.
COASE, R. (1960), “The Problem of Social Cost”, Journal of Law and Economics, 3, 1-44.
ECKART, W. (1985), “On the Land Assembly Problem”, Journal of Urban Economics, 18, 364-378.
GUL, F. (1989), “Bargaining Foundations of the Shapley Value”, Econometrica, 57, 81-95.
HART, S. and MAS-COLELL, A. (1996), “Bargaining and Value”, Econometrica, 64, 357- 380.
HERRERO, M.J. (1985), “N-player Bargaining and Involuntary Unemployment”, Ph.D. dissertation, London: London University.
HYNDMAN, K. and RAY, D. (2007), “Coalition Formation with Binding Agreements”, Review of Economic Studies, 74, 1125-1147.
KRISHNA, V. and SERRANO, R. (1996), “Multilateral Bargaining”, Review of Economic Studies, 63, 61-80.
MENEZES, F. and PITCHFORD, R. (2004), “A Model of Seller Holdout”, Economic Theory, 24, 231-253.
OKADA, A. (1996), “A Noncooperative Coalitional Bargaining Game with Random Proposers”, Games and Economic Behavior, 16, 97-108.
OKADA, A. (2000), “The Efficiency Principle in Non-cooperative Coalitional Bargaining”, Japanese Economic Review, 51, 34-50.
OSBORNE, M. and RUBINSTEIN, A., 1990, “Bargaining and Markets,” Academic Press, San Diego.
PARISI, F. (2002), “Entropy in Property”, American Journal of Comparative Law, 50, 595- 632.
PERRY, M. and RENY, P. (1994), “A Non-cooperative View of Coalition Formation and the Core”, Econometrica, 62, 795-817.
RAY, D. and VOHRA, R. (1997), “Equilibrium Binding Agreements”, Journal of Economic Theory, 73, 30-78.
RAY, D. and VOHRA, R. (1999), “A Theory of Endogenous Coalition Structures”, Games and Economic Behavior, 26, 286-336.
RUBINSTEIN, A. (1982), “Perfect Equilibrium in a Bargaining Model”, Econometrica, 50, 97-109.
SEIDMANN, D.J. and WINTER, E. (1998), “Gradual Coalition Formation”, Review of Economic Studies, 65, 793-815.
SERRANO, R. (1995), “A Market to Implement the Core”, Journal of Economic Theory, 67, 285-294.
SHAPIRO, C. (2001), “Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-setting”’. In: JAFFE, A., LERNER, J., STERN, S. (eds.) Innovation Policy and the Economy, Vol. I, Ch. 4. MIT Press. 29