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A Simulation Model of the Price Bargaining Rules in Vertical Relationships

Author

Listed:
  • Jeanne Duvallet

    (GILCO - Gestion Industrielle Logistique et Conception - INPG - Institut National Polytechnique de Grenoble)

  • Alexis Garapin

    (GAEL - Laboratoire d'Economie Appliquée = Grenoble Applied Economics Laboratory - UPMF - Université Pierre Mendès France - Grenoble 2 - INRA - Institut National de la Recherche Agronomique)

  • Michel Hollard
  • Daniel Llerena

    (GAEL - Laboratoire d'Economie Appliquée = Grenoble Applied Economics Laboratory - UPMF - Université Pierre Mendès France - Grenoble 2 - INRA - Institut National de la Recherche Agronomique)

Abstract

This paper analyzes the dynamics of the price and quantity bargaining between four agents, in a current industrial structure, with a special attention to the price bargaining. The structure combines a bilateral monopoly in a market for inputs, and a duopoly in a final market. After asimplified presentation of a model which proposes equilibrium solutions to the bargaining, we present the protocol and the results of an experiment whose objective is twofold. The first one is to test the assumptions of the model. The second one is to identify behavioral models and bargaining rules for a work of simulation. The experimental results do not confirm the solutions of the theoretical model, which predicted a Nash solution for the price bargaining, and used the cournot conjecture in the quantity bargaining. A detailed analysis of the results leads to some observations useful to parameterize a simulation model. The simulation runs a systematic analysis of the dynamics of the bargaining rules in this structure.

Suggested Citation

  • Jeanne Duvallet & Alexis Garapin & Michel Hollard & Daniel Llerena, 2004. "A Simulation Model of the Price Bargaining Rules in Vertical Relationships," Post-Print hal-01809164, HAL.
    • Handle: RePEc:hal:journl:hal-01809164
    DOI: 10.1023/b:csem.0000021670.32793.ea
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