Power indices suggest that adding new members to a voting body may affect the balance of power between the original members even if their number of votes and the decision rule remain constant. Some of the original members may actually gain even if voters are bargaining over a fixed budget. We show that this phenomenon can occur as an equilibrium of a non-cooperative bargaining game based on the...

In an industry characterised by secret vertical contracts, we consider a benchmark case where two vertical chains exist, with two upstream manufacturers selling to two downstream retailers, and show that the equilibrium prices are independent of whether upstream or downstream ̄rms have all the bargaining power. We then analyse two alternative mergers, and show that a downstream merger (which gi...

This paper studies optimal relational contracts when the value of the relationship between contracting parties is not commonly known. I consider a principal-agent setting where the principal has persistent private information about her outside option. I show that if the principal has the bargaining power, she wants to understate her outside option to provide strong incentives and then renege on...

In the present chapter we introduce several generalizations to the formulation and solution of the bargaining problem. Until the early 1960s, the study of social power (including political power) had been carried out exclusively by social scholars. That changed in 1962, when Harsanyi managed to introduce the rigor of mathematical reasoning into the theory of social power. He achieved this by ap...

Realism and liberalism disagree over the source of bargaining power in international relations. Realists believe that the success of a negotiator is a linear function of the capabilities that its home state possesses. Liberals stress the crucial importance of either the relative salience a country attaches to a contested issue or the importance negotiating governments have to attribute to power...

Foreign partner firms’ (FPs’) superior intangible assets such as technology and marketing and other management skill are an integral source of their bargaining power in their negotiations with potential joint venture partners (JPs) and government regulators in the host country. FPs which can exercise high levels of bargaining power enter the host country market with either a fully owned subsidi...

Market power in the hands of a supplier — such as a labor union — affects a firm’s optimal debt policy. If a firm maintains a high level of liquidity, workers may be encouraged to raise wage demands. In the presence of external finance constraints, a firm has an incentive to use the cash flow demands of debt service payments to improve its bargaining position. Using both cross-sectional estimat...

This work investigates how bargaining power affects negotiations between manufacturers and reverse logistics providers in reverse supply chains under government intervention using a novel three-stage reverse supply chain model for two scenarios, a reverse logistics provider alliance and no reverse logistics provider alliance. Utilizing the asymmetric Nash bargaining game, this work seeks equili...

We examine a supply base diversification problem faced by a buyer who periodically holds auctions to award short term supply contracts among a cohort of suppliers (i.e., the supply base). To mitigate significant cost shocks to procurement, the buyer can diversify her supply base by selecting suppliers from different regions. We find that the optimal degree of supply base diversification depends...

The collective approach to household behaviour models the household utility function as the weighted average of the utilities of the individual members of the household. These weights, which measure the relative bargaining power of males and females within the household, are generally regarded as fixed and exogenous. The paper extends the collective approach and estimates a model where the weig...