Stationary equilibria in bargaining with externalities

Jonas Björnerstedt and Andreas Westermark

Games and Economic Behavior, 2009, vol. 65, issue 2, 318-338

Abstract: This paper studies infinite-horizon bargaining between a seller and multiple buyers when externalities are present. We extend the analysis in Jehiel and Moldovanu by allowing for both pure and mixed equilibria [Jehiel, P., Moldovanu, B., 1995a. Cyclical delay in bargaining with externalities. Rev. Econ. Stud. 62, 619-637]. A characterization of the stationary subgame perfect equilibria in generic games is presented. Equilibria with delay exist only for strong positive externalities. Since each buyer receives a positive payoff when the seller makes an agreement with some other buyer, positive externalities induce a war of attrition between buyers.

Keywords: Bargaining; Externalities; Delay (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (4)

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