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“Nash-in-Nash” Bargaining: A Microfoundation for Applied Work

Allan Collard-Wexler (), Gautam Gowrisankaran and Robin Lee ()

No 20641, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A “Nash equilibrium in Nash bargains” has become a workhorse bargaining model in applied analyses of bilateral oligopoly. This paper proposes a non-cooperative foundation for “Nash-in-Nash” bargaining that extends the Rubinstein (1982) alternating offers model to multiple upstream and downstream firms. We provide conditions on firms’ marginal contributions under which there exists, for sufficiently short time between offers, an equilibrium with agreement among all firms at prices arbitrarily close to “Nash-in-Nash prices”—i.e., each pair's Nash bargaining solution given agreement by all other pairs. Conditioning on equilibria without delayed agreement, limiting prices are unique. Unconditionally, they are unique under stronger assumptions.

JEL-codes: C78 D43 L13 (search for similar items in EconPapers)
Date: 2014-10
New Economics Papers: this item is included in nep-com, nep-gth and nep-mic
Note: IO
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Published as Allan Collard-Wexler & Gautam Gowrisankaran & Robin S. Lee, 2019. "“Nash-in-Nash” Bargaining: A Microfoundation for Applied Work," Journal of Political Economy, vol 127(1), pages 163-195.

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