Econometrica: Sep 1985, Volume 53, Issue 5
Equilibrium in a Market with Sequential Bargaining
Ariel Rubinstein, Asher WolinskyThis paper considers a market where pairs of agents who are interested in carrying out a transaction are brought together by a stochastic process and, upon meeting, initiate a bargaining process over the terms of the transaction. The basic bargaining problem is treated with the strategic approach. The paper derives the steady state equilibrium agreements; analyzes their dependence on market conditions such as the relative numbers of agents of different types; and discusses their relations with the competitive equilibrium outcome and other results in the search equilibrium literature.
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