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An alternating-offers model of multilateral negotiations

Charles Thomas ()

Journal of Economic Behavior & Organization, 2018, vol. 149, issue C, 269-293

Abstract: I develop a model of the multilateral negotiations that are frequently observed when one party wishes to trade with one of several others offering potentially different amounts of surplus to be split. The model’s intuitively sensible equilibrium outcomes differ qualitatively from those in other models of these negotiations. I demonstrate one application of the model that provides empirical predictions about how the choice of transacting via negotiations or auctions is affected by factors including the number of trading partners, uncertainty when making the choice, and costly participation in the trading process. More generally the model provides a tractable foundation for analyzing strategic problems in settings featuring multilateral negotiations, including investment, product design, mergers, and hold-up.

Keywords: Bargaining; Auction; Procurement; Merger; Hiring; Investment (search for similar items in EconPapers)
JEL-codes: C78 D44 D82 (search for similar items in EconPapers)
Date: 2018
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Working Paper: An Alternating-Offers Model of Multilateral Negotiations (2012) Downloads
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Handle: RePEc:eee:jeborg:v:149:y:2018:i:c:p:269-293