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Externalities in a Bargaining Model of Public Price Announcements and Resale

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Abstract

We study the one-seller/two-buyer bargaining problem with negative identity-dependent externalities with an alternating offer bargaining model in which new owners of the object have the opportunity of resale. We identify the generically unique subgame perfect equilibrium outcome. The resale opportunity increases the competition among the buyers and therefore benefits the seller. When competition between buyers is very fierce, the seller may prefer to respond to bids rather than to propose an offer herself: a first-mover disadvantage.

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Authors and Affiliations

  1. CPB, Netherlands Bureau for Economic Policy Analysis, P.O. Box, 80510, 2508 GM, The Hague, The Netherlands

    Maarten Cornet

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  1. Maarten Cornet
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Cornet, M. Externalities in a Bargaining Model of Public Price Announcements and Resale. Theory and Decision 49, 375–393 (2000). https://doi.org/10.1023/A:1005213501393

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  • DOI: https://doi.org/10.1023/A:1005213501393

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