Competitive Bargaining Equilibrium

Julio Davila and Jan Eeckhout ()
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Jan Eeckhout: Department of Economics, University of Pennsylvania

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

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.

Keywords: Bargaining; Walrasian Equilibrium; Price-setting; Quantity Constraints; Search; Matching (search for similar items in EconPapers)
JEL-codes: C60 C71 D41 D51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth
Date: 2004-05-01
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http://economics.sas.upenn.edu/system/files/04-024.pdf (application/pdf)

Related works:
Working Paper: Competitive Bargaining Equilibria (2004)
Journal Article: Competitive bargaining equilibrium (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:pen:papers:04-024

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