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The inefficiency of price quantity bargaining
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2009 (English)In: Economic Theory, ISSN 0938-2259, E-ISSN 1432-0479, Vol. 40, no 2, 301-332 p.Article in journal (Refereed) Published
Abstract [en]

In bargaining between a buyer and several sellers on prices and quantities, strategic inefficiencies arise. By reallocating quantities between agreements, the buyer can increase its share of the surplus. With two symmetric sellers producing substitutes, the quantity in the first agreement will be higher than the efficient quantity, and the quantity in the last lower, thus implying that sellers are strategically discriminated. When asymmetries are not too large and sellers produce substitutes, the buyer first agrees with the seller with the lowest marginal cost and only the most efficient order of agreement is an equilibrium outcome. When goods are complements, both equilibrium quantities are lower than the efficient levels.

Place, publisher, year, edition, pages
2009. Vol. 40, no 2, 301-332 p.
Keyword [en]
Bargaining, Inefficiencies, Strategic discrimination, Substitutability
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Research subject
URN: urn:nbn:se:uu:diva-132094DOI: 10.1007/s00199-008-0375-3ISI: 000266655300007OAI: oai:DiVA.org:uu-132094DiVA: diva2:356931
Available from: 2010-10-14 Created: 2010-10-14 Last updated: 2010-12-29Bibliographically approved

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