Trading bargaining weights |
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Authors: | U Ervig C-J Haake |
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Institution: | Institute of Mathematical Economics, Bielefeld University, P.O. Box 100131, 33501 Bielefeld, Germany |
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Abstract: | We consider a model, in which two agents are engaged in two separate bargaining problems. We introduce a notion of bargaining weights (bargaining power), which is basically given by asymmetric versions of the Perles–Maschler bargaining solution. Thereby, we view bargaining power as ordinary goods that can be traded in an exchange economy. With equal initial endowment of bargaining power there exists a Walrasian equilibrium in this exchange economy such that the utility allocation in equilibrium coincides with the Perles–Maschler bargaining solution of the aggregate bargaining problem. Equilibrium prices are given by the primitives of the two bargaining problems. |
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Keywords: | Bargaining power Perles– Maschler Solution Equilibrium model |
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