Investments and bargaining in a model with positive consumption externalities

Daniel Cardona and Antoni Rubí-Barceló ()

Journal of Economic Behavior & Organization, 2014, vol. 108, issue C, 78-93

Abstract: This paper analyzes the investment decisions of the members of a committee when a subsequent bargaining process determines the distribution of a divisible good among them. The shares allocated to investing agents generate positive consumption externalities. We show that agents’ investments improve their bargaining position. This induces rent-seeking behavior that generates a negative external effect on other investing agents. In this setting, the effects of rent-seeking counterbalance the effects of positive consumption externalities so that equilibria may be efficient or display either over- or under-investment.

Keywords: Investments; Hold-up; Multilateral bargaining; Pareto efficiency; Externalities (search for similar items in EconPapers)
JEL-codes: C78 D62 J24 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268114002200
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:108:y:2014:i:c:p:78-93

DOI: 10.1016/j.jebo.2014.07.016

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().