Bargaining with asymmetric externalities
We consider sequential bargaining between three firms that are all essential in creating a surplus. One of the firms is dominant in the sense that it ultimately decides whether the surplus will be created. The other firms have an incentive to get a large share of the pie for themselves, but leaving enough for the dominant firm that it finds it profitable to create the surplus. Hence, the smaller firms have pref- erences over who they take their share from. Of all of the bargaining protocols that we consider, we identify the set of Pareto optimal pro- tocols, and show which of them will be uniquely preferred by each firm.
PublisherUniversitetet i Tromsø
University of Tromsø
SeriesWorking paper series in economics and management, 2007, nr 2
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