Munich Personal RePEc Archive

A sequential bargaining protocol for land rental arrangements

Valencia-Toledo, Alfredo and Vidal-Puga, Juan (2017): A sequential bargaining protocol for land rental arrangements.

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Abstract

We consider land rental between a single tenant and several lessors. The tenant should negotiate sequentially with each lessor for the available land. In each stage, we apply the Nash bargaining solution. Our results imply that, when all land is necessary, a fixed price per unit is more favourable for the tenant than a lessor-dependent price. Furthermore, a lessor is better off with a lessor-dependent price only when negotiating first. For the tenant, lessors' merging is relevant with lessor-dependent price but not with fixed price.

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