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Equilibrium Contracts In a Bilateral Monopoly with Unequal Bargaining Powers

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  • Dasgupta Siddhartha
  • Devadoss Stephen

Abstract

Real-world bilateral monopolies often indicate that one party exercises slightly Superior bargaining power than the other party. We analyze long-term, cooperative Contracts in bilateral monopolies with unequal bargaining powers. We assume that the Two parties bargain for a determinate price and quantity of the intermediate product by Optimizing a joint objective which takes into account the profits and bargaining power of Each party. We use a Bowley price leadership model to develop the multi-period Contracts and derive conditions that induce a Nash equilibrium at the jointly determined Points of operation. [C71,C78]

Suggested Citation

  • Dasgupta Siddhartha & Devadoss Stephen, 2002. "Equilibrium Contracts In a Bilateral Monopoly with Unequal Bargaining Powers," International Economic Journal, Taylor & Francis Journals, vol. 16(1), pages 43-71.
    • Handle: RePEc:taf:intecj:v:16:y:2002:i:1:p:43-71
    DOI: 10.1080/10168730200000003
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    References listed on IDEAS

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    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
    3. William Fellner, 1947. "Prices and Wages under Bilateral Monopoly," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 61(4), pages 503-532.
    4. Alvin E Roth, 2008. "Axiomatic Models of Bargaining," Levine's Working Paper Archive 122247000000002376, David K. Levine.
    5. Devadoss Stephen & Cooper Kevin, 2000. "Simultaneous Price And Quantity Determination In A Joint Profit Maximizing Bilateral Monopoly Under Dynamic Optimization," International Economic Journal, Taylor & Francis Journals, vol. 14(1), pages 71-84.
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    Cited by:

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    3. Elges, Carsten, 2016. "Die Preissetzung in Unternehmenskooperationen: Erste spieltheoretische Überlegungen," Arbeitspapiere 162, University of Münster, Institute for Cooperatives.

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