A Simulation Model of the Price Bargaining Rules in Vertical Relationships

Jeanne Duvallet, Alexis Garapin, Michel Hollard and Daniel Llerena ()
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Jeanne Duvallet: GILCO - Gestion Industrielle Logistique et Conception - INPG - Institut National Polytechnique de Grenoble
Daniel Llerena: GAEL - Laboratoire d'Economie Appliquée = Grenoble Applied Economics Laboratory - UPMF - Université Pierre Mendès France - Grenoble 2 - INRA - Institut National de la Recherche Agronomique

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Abstract: This paper analyzes the dynamics of the price and quantity bargaining between four agents, in a current industrial structure, with a special attention to the price bargaining. The structure combines a bilateral monopoly in a market for inputs, and a duopoly in a final market. After asimplified presentation of a model which proposes equilibrium solutions to the bargaining, we present the protocol and the results of an experiment whose objective is twofold. The first one is to test the assumptions of the model. The second one is to identify behavioral models and bargaining rules for a work of simulation. The experimental results do not confirm the solutions of the theoretical model, which predicted a Nash solution for the price bargaining, and used the cournot conjecture in the quantity bargaining. A detailed analysis of the results leads to some observations useful to parameterize a simulation model. The simulation runs a systematic analysis of the dynamics of the bargaining rules in this structure.

Date: 2004-03
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Published in Computational Economics, 2004, 23 (2), pp.121-145. ⟨10.1023/b:csem.0000021670.32793.ea⟩

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Journal Article: A Simulation Model of the Price Bargaining Rules in Vertical Relationships (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01809164

DOI: 10.1023/b:csem.0000021670.32793.ea

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