Sequential bargaining,external effects of agreement,and public intervention |
| |
Authors: | Margrethe Aanesen |
| |
Institution: | (1) Department of Economics, University of Helsinki, P.O. Box 17, 00014 Helsinki, Finland;(2) Helsinki Center of Economic Research (HECER), University of Helsinki, P.O. Box 17, 00014 Helsinki, Finland |
| |
Abstract: | In some bargaining situations, agreement has implications for agents beyond the parties involved, and if so, delays in reaching an agreement or failing to reach an agreement, when this would be profitable, may imply significant welfare losses. The question raised in this paper is whether the intervention of a government, who has a positive valuation of agreement and therefore offers a subsidy, will reduce such delays and inabilities to reach agreement? Based on a perfect Bayesian equilibrium in a sequential bargaining game with intervention, we show that in equilibrium intervention always reduces the ex ante equilibrium inefficiency and conditionally reduces expected delays in trade. However, for intervention in the form of a subsidy to take place, the aggregate of the seller’s reservation price and the externalities must be (almost) as high as the buyer’s upper valuation limit. |
| |
Keywords: | |
本文献已被 SpringerLink 等数据库收录! |
|