The Nash bargaining solution in general n-person cooperative games

We present a noncooperative foundation for the Nash bargaining solution for an n-person cooperative game in strategic form. The Nash bargaining solution should be immune to any coalitional deviations. Our noncooperative approach yields a new core concept, called the Nash core, for a cooperative game based on a consistency principle. We prove that the Nash bargaining solution can be supported (in every subgame) by a stationary subgame perfect equilibrium of the bargaining game if and only if the Nash bargaining solution belongs to the Nash core.     

Endogenous Timing in Mixed Duopolies With Externality

We investigate endogenous timing in a mixed duopoly with a negative externality. We find that quantity (price) competition yields a simultaneous‐move (sequential‐move) outcome under a significant negative externality. These results indicate that mixed duopolies yield the same results as private duopolies under a significant negative externality, which is in sharp contrast to the results in mixed duopolies without a negative externality. Unless the negative externality is insignificant, public leadership yields greater welfare than private leadership, and public leadership is more robust than the private leadership as equilibrium. If optimal environmental tax policy is introduced, however, private leadership yields the greatest welfare and this an equilibrium outcome in the endogenous timing game under quantity competition.     

Cooperation and Institution in Games

Based on recent developments in non‐cooperative coalitional bargaining theory, I review game theoretical analyses of cooperation and institution. First, I present basic results of the random‐proposer model and apply them to the problem of involuntary unemployment in a labour market. I discuss extensions to cooperative games with externalities and incomplete information. Next, I consider the enforceability of an agreement as an institutional foundation of cooperation. I re‐examine the contractarian approach to the problem of cooperation from the viewpoint that individuals may voluntarily create an enforcement institution.     

Business groups in a market economy

The purpose of this paper is to examine the nature and significance of the interfirm relationship called the business group. First, the nature of the Japanese business group is discussed. It is then pointed out that the business group is not a phenomenon unique to Japan, and an effort is made to explain the significance of the business group in the context of a market economy, using the Williamsonian approach to questions of internal organization and the market. Finally, the relationship between the input-output relationship of the firms and their group affiliation is tested.     

A Note on Environmental Awareness and Cross-Border Pollution

Considering a Nash equilibrium in which a developed country chooses the amount of foreign aid and a developing country sets the emission tax rate and the proportion of the received aid allocated to public abatement of pollution, it is shown that an increase in the recipient countrys environmental awareness will reduce the level of cross-border pollution and benefits the donor though its foreign aid is increased.