N-PERSON NASH BNARGAINING WITH VARIABEL THREATS*

We consider two models of n-person bargaining problems with the endogenous determination of disagreement points. In the first model, which is a direct extension of Nash's variable threat bargaining model, the disagreement point is determined as an equilibrium threat point. In the second model, the disagreement point is given as a Nash equilibrium of the underlying noncooperative game. These models are formulated as extensive games, and axiomatizations of solutions are given for both models. It is argued that for games with more than two players, the first bargaining model does not preserve some important properties valid for two-person games, e.g., the uniqueness of equilibrium payoff vector. We also show that when the number of players is large, any equilibrium threat point becomes approximately a Nash equilibrium in the underlying noncooperative game, and vice versa. This result suggests that the difference between the two models becomes less significant when the number of players is large.     

International Asset Trade,Capital Income Taxation,and Specialization Patterns

This paper constructs a small economy version of dynamic Heckscher‐Ohlin models with overlapping generations and analyzes effects of capital income taxation on the specialization pattern of the country. It is shown that once international asset trade is allowed, in the presence of international technological asymmetries, a small country eventually leads to perfect specialization in our overlapping generations model. It is also shown that the residence‐based tax has no effect on the specialization pattern while the source‐based tax has a negative effect on capital accumulation and thereby it can affect the specialization pattern of the small country.