Roy Chowdhury, Prabal and Sengupta, Kunal (2009): Transparency, complementarity and holdout.
Download (198Kb) | Preview
This paper characterizes the conditions under which holdout (i.e. bargaining inefficiency) may, or may not be significant in a two-sided, one-buyer-many-seller model with complementarity. We address this problem in a very general setup with a bargaining protocol that is symmetric and allows for both publicly observable, as well as secret offers, and a technology that allows for variable degrees of complementarity. The central insight is that the transparency of the bargaining protocol, formalized by whether offers are publicly observable or secret, as well as the extent of complementarity, play a critical role in generating efficiency. Even with perfect complementarity, holdout seems to be largely resolved whenever the bargaining protocol is public (but not if it is secret). Further, irrespective of the bargaining protocol, holdout is resolved if the marginal contribution of the last seller is not too large.
|Item Type:||MPRA Paper|
|Original Title:||Transparency, complementarity and holdout|
|Keywords:||Multi-person bargaining, holdout, complementarity, efficiency, secret offers, public offers, Coase theorem, transparency.|
|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:||04. Oct 2009 06:28|
|Last Modified:||15. Feb 2013 02:11|
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.
Compte, O., P. Jehiel (2002), "On the Role of Outside Options in Bargaining with Obstinate Parties," Econometrica 70, 1477-1517.
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.