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Bargaining order and delays in multilateral bargaining with heterogeneous sellers

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  • Sarkar, Shubhro

Abstract

We consider a complete-information multilateral bargaining game in which a single buyer negotiates with two heterogeneous sellers selling perfect complementary units. While bilateral negotiations take place through a sequence of offers and counteroffers, the bargaining order is exogenously given. We solve for the conditions under which (a) the buyer prefers to negotiate with the lower-valuation seller first and (b) efficient (inefficient) outcomes emerge for the two bargaining orders. We find that the buyer prefers to negotiate with the lower-valuation seller first whenever the players are relatively impatient or the sellers are sufficiently heterogeneous. We show that there exists a unique efficient outcome when the buyer negotiates first with the lower-valuation seller and the sellers are sufficiently heterogeneous; however, significant delay in reaching agreements may arise when they are not. In case the buyer bargains with the higher-valuation seller first, an inefficient outcome is shown to exist even when players are extremely impatient.

Suggested Citation

  • Sarkar, Shubhro, 2016. "Bargaining order and delays in multilateral bargaining with heterogeneous sellers," Mathematical Social Sciences, Elsevier, vol. 80(C), pages 1-20.
    • Handle: RePEc:eee:matsoc:v:80:y:2016:i:c:p:1-20
    DOI: 10.1016/j.mathsocsci.2015.12.004
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    References listed on IDEAS

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