Trade Negotiations under Alternative Bargaining Structure

Neelanjan Sen and Rajit Biswas ()

Economics and Politics, 2015, vol. 27, issue 3, 509-523

Abstract: type="main" xml:id="ecpo12067-abs-0001">

We build a bargaining model, in which a country (leader) decides whether or not to form a free trade agreement with other nations (followers), either through a sequential or a multilateral bargaining procedure. Unlike Aghion et al. ( , Journal of International Economics, 73, 1–30), in our specification of multilateral bargaining, the leader can collude with all those follower countries who agree to its offer. This has important implications for the choice of sequential and multilateral bargaining by the leader in presence of coalition externalities. Moreover, this bargaining procedure ensures that “stumbling block” equilibrium will never occur.

Date: 2015
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