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

Allan Collard-Wexler, Gautam Gowrisankaran, Robin S. Lee

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

A “Nash equilibrium in Nash bargains” has become a workhorse bargaining model in applied analyses of bilateral oligopoly. This paper proposes a noncooperative foundation for “Nash-in-Nash” bargaining that extends Rubinstein’s 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, that is, 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.

Original languageEnglish (US)
JournalJournal of Political Economy
DOIs
StateAccepted/In press - Jan 1 2019

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Microfoundations
Nash bargaining
Alternating offers
Marginal contribution
Bargaining model
Nash equilibrium
Nash bargaining solution
Bilateral oligopoly
Conditioning

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

“Nash-in-Nash” Bargaining : A Microfoundation for Applied Work. / Collard-Wexler, Allan; Gowrisankaran, Gautam; Lee, Robin S.

In: Journal of Political Economy, 01.01.2019.

Research output: Contribution to journalArticle

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