Bargaining and Strategic Discrimination

Jonas Björnerstedt () and Andreas Westermark
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Jonas Björnerstedt: The Research Institute for Industrial Economics, Postal: The Research Institute for Industrial Economics, P.O Box 55665, SE-102 15 Stockholm, Sweden

No 2006:6, Working Paper Series from Uppsala University, Department of Economics

Abstract: In bargaining between two sellers and one buyer on prices and quantities, strategic inefficiencies arise. By reallocating between the last agreement and the first, the buyer can increase it's share of the surplus. With symmetric sellers producing substitutes, the quantities in the first agreement will be higher than the efficient, and lower than the efficient in the last, implying that sellers are strategically discriminated. In equilibrium when the sellers produce substitutes, the buyer agrees first with the seller with lowest marginal cost. Efficiency is decreasing in the symmetry of the sellers and in the relative bargaining power of the sellers.

Keywords: Bargaining; discrimination; intermediate goods; labor demand (search for similar items in EconPapers)
JEL-codes: C78 J22 J71 L10 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2006-02-08
New Economics Papers: this item is included in nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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