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Bargaining cum Voice

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  • Gersbach, Hans
  • Haller, Hans

Abstract

We propose a formal concept of the power of voice in the context of a simple model where individuals form groups and trade in competitive markets. Individuals use outside options in two different ways. Actual outside options reflect the possibility to exit or to join other existing groups. Hypothetical outside options refer to hypothetical groups that are ultimately not formed. Articulation of hypothetical outside options in the bargaining process determines the relative bargaining power of the members of a group, which constitutes an instance of the power of voice. The adopted equilibrium concept, competitive equilibrium with free group formation and bargaining cum voice, endogenizes the outside options as well as the power of voice. We establish existence of such equilibria and we explore their properties.

Suggested Citation

  • Gersbach, Hans & Haller, Hans, 2010. "Bargaining cum Voice," CEPR Discussion Papers 7774, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:7774
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    Cited by:

    1. Hans Gersbach & Hans Haller, 2012. "“Hard workers” and labor restrictions," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(2), pages 469-494, January.

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    More about this item

    Keywords

    Articulation of outside options; Bargaining; Competitive equilibria; Group formation; Power of voice;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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