Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 692: Immediate Agreement in Interdependent Bilateral Bargaining

Jonas Björnerstedt () and Johan Stennek ()
Additional contact information
Jonas Björnerstedt: Swedish Competition Authority, Postal: SE-103 85 Stockholm, Sweden
Johan Stennek: Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden

Abstract: This note provides sufficient conditions for immediate agreement in an extensive form model of interdependent bilateral bargaining. The model is suggested by Björnerstedt and Stennek (2006) as a work horse for studying bilateral oligopoly. The key feature of this model is that the firms are represented by separate agents in all negotiations in which they are involved. There is immediate agreement in equilibrium, essentially if production is strictly convex or if the agents use Markov strategies.

Keywords: Bilateral Oligopoly; Intermediate Goods; Bargaining; Market Network; Trade Link

JEL-codes: C70; D20; D40; L10; L40

27 pages, January 25, 2007

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