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Stationary equilibria in bargaining with externalities

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  • Björnerstedt, Jonas
  • Westermark, Andreas

Abstract

This paper studies infinite-horizon bargaining between a seller and multiple buyers when externalities are present. We extend the analysis in Jehiel and Moldovanu by allowing for both pure and mixed equilibria [Jehiel, P., Moldovanu, B., 1995a. Cyclical delay in bargaining with externalities. Rev. Econ. Stud. 62, 619-637]. A characterization of the stationary subgame perfect equilibria in generic games is presented. Equilibria with delay exist only for strong positive externalities. Since each buyer receives a positive payoff when the seller makes an agreement with some other buyer, positive externalities induce a war of attrition between buyers.

Suggested Citation

  • Björnerstedt, Jonas & Westermark, Andreas, 2009. "Stationary equilibria in bargaining with externalities," Games and Economic Behavior, Elsevier, vol. 65(2), pages 318-338, March.
    • Handle: RePEc:eee:gamebe:v:65:y:2009:i:2:p:318-338
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    References listed on IDEAS

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    Keywords

    Bargaining Externalities Delay;

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