efficient and durable decision rules with incomplete information we compare six concepts of efficiency for economies with incomplete information depending on the stage at which individuals welfare is evaluated and on whether incentive constraints are recognized an example is shown in which an incentive efficient decision rule may be unanimously rejected by the individuals in the economy we define durable decision rules which can resist such unanimous rejection and show that efficient durable decision rules exist

optimal auction with resale this paper investigates the design of seller optimal auctions when winning bidders can attempt to resell the good in that case the optimal allocation characterized by myerson 1981 cannot be achieved without resale i find a sufficient and necessary condition for sincere bidding given the possibility of resale in two bidder cases i prove that the myerson allocation can be achieved under standard conditions supplemented with two assumptions with three or more bidders achieving the myerson allocation is more difficult i prove that it can be implemented in special cases in those cases the myerson allocation is generated through a sequence of resale auctions each optimally chosen by a reseller

applied general equilibrium models of taxation and international trade an introduction and survey we wish to acknowledge the help of three referees and of john pencavel on several earlier drafts as well as the assistance of the modelers whose work is referred to in the paper they corrected our lack of understanding of their work and provided many other helpful comments excellent research and bibliographical assistance have been provided by debbie fretz radwan shaban and janet stotsky helpful comments have been made by charles ballard michael boskin lans bovenberg sylvester damus harvey galper glenn harrison gordon lenjosek jack mutti serena ng t n srinivasan charles stuart and eric toder the authors also acknowledgefinancial support from the national bureau of economic research the national science foundation international business machines and the social sciences and humanities research council ottawa canada

durable goods monopolists durable goods monopolists face special problems because the sale of their products creates a secondhand market not controlled by the monopolist to the extent the monopolist is able to rent his product rather than sell it or to make binding promises about his future production such problems are ameliorated given the inability to do the above the monopolist is led to producing goods less durable than those produced by either competitive firms or monopolist returns a reverse averch johnson result that monopolist sellers may invest less in fixed costs including plant modernization and research and development than would the renters is shown it is also shown that even though sellers have less monopoly power than renters and nondurable goods monopolists it is possible that the seller will cause a greater deadweight loss than the other types of monopolies

user innovators and local information the case of mountain biking in a study of innovations developed by mountain bikers we find that userinnovators almost always utilize local information information already in their possession or generated by themselves both to determine the need for and to develop the solutions for their innovations we argue that this finding fits the economic incentives operating on users local need information will in general be the most relevant to user innovators since the bulk of their innovation related rewards typically come from in house use user innovators will increasingly tend to rely on local solution information as the stickiness of non local solution information rises

bargaining and strikes strikes are generally regarded as an important economic phenomenon and yet good theoretical explanations of them are hard to come by the difficulty is to understand why rational parties should resort to a wasteful mechanism as a way of distributing the gains from trade why could not both parties be made better off by moving to the final distribution of surplus immediately or if it is uncertain to its certainty equivalent and sharing the benefits from increased production

why are some independent inventors heroes and others hobbyists the moderating role of technological diversity and specialization abstract despite a substantial body of research investigating the market significance of inventions by independent inventors relatively little attention has been devoted to understanding their technological significance a recent study conducted by dahlin k taylor m fichman m 2004 today s edisons or weekend hobbyists technical impact and success of inventions by independent inventors res policy 33 1167 1183 on the tennis racket industry shows that independent inventors are a heterogeneous group which includes both heroes who contribute substantially to technological progress and hobbyists who make only a marginal contribution what is not asked and therefore not explained is why this distinction arises in this paper we focus on the type of prior technological knowledge in terms of technological specialization and diversity applied by independent inventors and their corporate counterparts as a factor explaining differences in technological impact our empirical setting is the field of medical equipment technology we find that independent inventors are more sensitive to the negative effects of technological diversity than their corporate counterparts furthermore our study reveals that technological specialization pays off more for independent inventors than for their corporate counterparts therefore those independent inventors who apply low degrees of diversity and high degrees of specialization are capable of reaching the same level as or even outperforming their corporate counterparts thus becoming heroes based on our findings we discuss implications for research and corporate practice

user industry spinouts downstream industry knowledge as a source of new firm entry and survival recent scholarship on entrepreneurship suggests that the pre entry know how of start ups embodied in their founders affects not only entry but also performance although prior work focuses on new entrants from the focal industry i e employee spinouts and academic organizations i e university spinoffs this study identifies and examines a hybrid category of start ups from downstream user industries which we call user industry spinouts we draw from the literature on evolutionary theory user innovation and industrial dynamics to propose that given the unique combination of knowledge inherited by these entrants their choices at entry and their ability to survive in the focal industry will differ with respect to other start ups we do this by extending existing work on new firm creation to investigate entry and performance in different product markets our findings based on a dataset of start ups in the semiconductor industry over a 10 year period 1997 2007 show that user industry spinou

foundations of dynamic monopoly and the coase conjecture subgame perfect equilibria are characterized for a market in which the seller quotes a price each period assume zero costs positive interest rate continuum of buyers and some technical conditions if buyers valuations are positive then equilibrium is unique buyers strategies are stationary and the price sequence is determinant along the equilibrium path but possibly randomized elsewhere otherwise a continuum of stationary equilibria can exist but at most one with analytic strategies coase s conjecture is verified for stationary strategies reducing the period length drives all prices to zero or the least valuation connections to bargaining models are described journal qf economic literature classification

does sticky information affect the locus of innovation evidence from the japanese convenience store industry abstract scholars have long discussed the locus of innovation and its determinants there is empirical evidence that innovations can be developed by those holding any of a number of functional relationships to them such as manufacturers users or materials suppliers past studies have considered two factors important in predicting the functional locus of innovation one is expected profit of a player involved in the innovation and the other is stickiness of innovation related information although some studies have shown empirically the link between an innovator s expected profits and the locus of innovation no research has yet been conducted to test the hypothesized relationship between stickiness of innovation related information and the locus of innovation in the study reported upon here i explore relationships between these two variables via a study of 24 innovations for the japanese convenience store industry my study shows empirically that stickiness of innovation related information does have the hypothesized relationship to the functional locus of innovation i discuss implications of these findings and some directions for future research

the true index of cost of living under general equilibrium the numeraire matters abstract the evaluation of welfare effects should be unambiguous we show that the konus true index of cost of living is numeraire dependent in general equilibrium this may lead to ambiguous even contradictory interpretations of welfare results to correct this problematic interpretational situation we propose a normalization of the standard konus index using an endogenously determined price index we also provide a simplified expression of the index for the special case of homothetic utilities which is especially relevant given their widespread use in numerical general equilibrium

relationships and traders in madagascar this article documents the role that personal relationships play in economic exchange original survey data show that agricultural traders in madagascar perceive relationships as the most important factor for success in their business evidence details the extent to which relationships are used to serve a variety of purposes such as the circulation of information about prices and market conditions the provision of trade credit the prevention and handling of contractual difficulties the regularity of trade flows and the mitigation of risk of these the regularity of supply and demand and the sharing of risk appear particularly important larger and more prosperous traders are those with quantitatively and qualitatively better relationships family plays little role in business beyond assistance at start up

bargaining in a network of buyers and sellers abstract we analyze bargaining between buyers and sellers who are connected by an exogenously given network players can make repeated alternating public offers that may be accepted by any of the responders linked to each specific proposer our purpose is to find the conditions of the network which drive the price distribution in equilibrium this paper uses graph theory tools to provide necessary and sufficient conditions regarding the architecture of networks for the subgame perfect equilibrium of the bargaining game to coincide with the walrasian outcome

power brokers middlemen in legislative bargaining abstract we study a model of decentralized legislative bargaining over public decisions with transfers we establish the emergence of middlemen in legislative bargaining as a robust equilibrium phenomenon we show that legislative intermediation can impact policy outcomes and can be inefficient to fulfill this role the middleman s policy preferences and bargaining position must be such that its role of intermediary is credible but the political middleman must also directly benefit from policy change the results highlight fundamental differences between the role of intermediaries in politics and exchange economies

the role of networks in antitrust investigations antitrust investigations typically focus on the competitive pressures coming from within the defined markets of interest however competitive pressures can also come from other markets even when individually these markets place only weak constraints on one another collectively they may matter a networks approach to modelling competition permits a systemic view of competition that can sometimes paint a more accurate picture we demonstrate this through some simple examples and show more generally how tools from the networks literature can be applied to capture competition across a system of interrelated markets as a leading example we consider antitrust investigations into supermarkets where local geographic markets have been used as the basis of investigation

dynamic matching two sided incomplete information and participation costs existence and convergence to perfect competition consider a decentralized dynamic market with an infinite horizon and participation costs in which both buyers and sellers have private information concerning their values for the indivisible traded good time is discrete each period has length and each unit of time continuums of new buyers and sellers consider entry traders whose expected utility is negative choose not to enter within a period each buyer is matched anonymously with a seller and each seller is matched with zero one or more buyers every seller runs a first price auction with a reservation price and if trade occurs both the seller and the winning buyer exit the market with their realized utility traders who fail to trade continue in the market to be rematched we characterize the steady state equilibria that are perfect bayesian we show that as converges to zero equilibrium prices at which trades occur converge to the walrasian price and the realized allocations converge to the competitive allocation we also show the existence of equilibria for sufficiently small provided the discount rate is small relative to the participation

the digital provide information technology market performance and welfare in the south indian fisheries sector when information is limited or costly agents are unable to engage in optimal arbitrage excess price dispersion across markets can arise and goods may not be allocated efficiently in this setting information technologies may improve market performance and increase welfare between 1997 and 2001 mobile phone service was introduced throughout kerala a state in india with a large fishing industry using microlevel survey data we show that the adoption of mobile phones by fishermen and wholesalers was associated with a dramatic reduction in price dispersion the complete elimination of waste and near perfect adherence to the law of one price both consumer and producer welfare increased

equilibrium in a market with sequential bargaining this 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 this paper considers a market that operates in the following way pairs of agents who have mutual interest in carrying out a transaction are brought together by a stochastic process when two agents meet they initiate a bargaining process over the terms of the transaction if two agents reach an agreement a transaction takes place and they leave the market of course the bargaining positions and hence the agreement reached in any particular meeting will be affected by the conditions prevailing in the market these will include the chances that each of the negotiating parties have of meeting other partners in the event that the agreement in the current negotiations is delayed also the expected length of time required to achieve an alternative transaction and the expected behavior of alternative partners the study of such a market mechanism is of interest for two reasons firstly it captures some realistic aspects of the trade in certain specific markets e g asset markets such as housing and some labor markets secondly it contributes to an understanding of the micro mechanisms of price formation and their role in shaping market outcomes in both cases the features studied are largely neglected in the traditional market equilibrium analyses the related literature includes the articles by diamond 4 5 diamond and maskin 6 mortensen 8 9 and zusman and bell 13 these articles consider markets of the type described above in which transactions are concluded at pairwise meetings of agents the major difference between our work and these articles is in the approach to the basic bargaining problem in the cited articles it is assumed that a meeting is concluded with an instantaneous agreement which divides the associated surplus in an arbitrary predetermined way when the surplus is assumed to be divided equally the division rule is in fact nash s axiomatic bargaining solution in contrast the present paper treats the basic bargaining problem with the strategic approach see rubinstein 19 which constitutes an attempt to look into the bargaining black box this approach explicitly models the time dimension of the bargaining process describes in detail the bargaining procedure and justifies the agreement as a perfect equilibrium in

bilateral bargaining in networks abstract each connected pair of nodes in a network can jointly produce one unit of surplus a maximum number of linked nodes is selected in every period to bargain bilaterally over the division of the surplus according to the protocol proposed by rubinstein and wollinsky equilibrium in a market with sequential bargaining econometrica 53 1985 1133 1150 all pairs which reach an agreement obtain the discounted payoffs and are removed from the network this bargaining game has a unique subgame perfect equilibrium that induces the dulmage mendelsohn decomposition partition of the bipartite network of the set of nodes in this network

bargaining with incomplete information an infinite horizon model with two sided uncertainty the resolution of any bargaining conflict depends crucially on the relative urgency of the agents to reach agreement and the information each agent has about the others preferences this paper explores within the context of an infinite horizon bargaining model with two sided uncertainty how timing and information affect the rational behaviour of agents when commitment is not possible since the bargainers are uncertain about whether trade is desirable they must communicate some of their private information before an agreement can be reached this need for learning due to incomplete information about preferences results in bargaining inefficiencies trade often occurs after costly delay thus the model provides an explanation for the inefficient bargaining behaviour that appears to occur often in practice

reputation in bargaining and durable goods monopoly this paper analyzes durable goods monopoly in an infinite horizon discrete time game we prove that as the time interval between successive offers approaches zero all seller payoffs between zero and static monopoly profits are supported by subgame perfect equilibria this reverses a well known conjecture of coase alternatively one can interpret the model as a sequential bargaining game with one sided incomplete information in which an uninformed seller makes all the offers our folk theorem for seller payoffs equally applies to the set of sequential equilibria of this bargaining game

incomplete information bargaining with outside opportunities we consider two kinds of outside opportunity that a seller of an indivisible good might have selling to a different buyer and consuming the good herself in both models the seller is uncertain about the buyer s valuation and becomes more pessimistic over time when the seller becomes sufficiently pessimistic she prefers the outside opportunity so she will not bargain indefinitely with the current buyer despite the resulting finite horizon nature of negotiations the link between the buyer s willingness to accept an offer and the seller s eagerness to go outside generates multiple equilibria

in defence of the linear model an essay this essay discusses the strength and weaknesses of the so called linear model lm of innovation it is a reaction to the habit of criticising it as over simplistic mechanistic or simply blatantly wrong we argue that while some criticisms are of course well grounded many others are instead based on loose interpretations and unwarranted assumptions in order to separate the wheat from the chaff this essay first presents a comprehensive description of the linear model and differentiates it from the caricature many refer to second we discuss the main criticisms put forward and argue that many of them are not at all destructive but can be easily accepted within a refined version of the lm third we discuss the policy implications often derived or said to derive from the lm to argue that the lm itself is distinctively policy neutral other assumptions have to be added to justify alternative policy implications

the numeraire matters in cost benefit analysis abstract the choice of numeraire is shown to be important in cost benefit analysis when a public good is involved individual consumers marginal rates of substitution will generally differ thus the less valuable the numeraire is to a person the higher the number required to express his net benefit and the more will his interest weigh in the total sum the choice of money as numeraire is systemetically favourable to those who value money the least relative to alternative numeraires

globalisation of knowledge production and regional innovation policy supporting specialized hubs in the bangalore software industry abstract this paper is concerned with the changing role of regional innovation systems and regional policies in supporting the transition of indigenous firms in developing countries from competing on low costs towards becoming knowledge providers in global value chains special attention is paid to policies supporting the emergence and development of the regional innovation system in this transition process regional innovation systems in developing countries have very recently started to be conceptualised as specialized hubs in global innovation and production networks asheim b coenen l vang lauridsen j 2007 face to face buzz and knowledge bases socio spatial implications for learning innovation and innovation policy environment and planning c government and policy 25 5 655 670 chaminade c vang j 2006a innovation policy for small and medium size smes in asia an innovation systems perspective in yeung h ed handbook of research on asian business edward elgar cheltenham maggi c 2007 the salmon farming and processing cluster in southern chile in pietrobello c rabellotti r eds upgrading and governance in clusters and value chains in latin america harvard university press a specialized hub refers to a node in a global value chain that mainly undertakes one or a few of the activities required for the production and development of a given good or service or serves a particular segment of the global market in global value chains firms in developing countries have traditionally been responsible for the lowest added value activities however a few emerging regional innovation systems in developing countries are beginning to challenge this scenario by rapidly upgrading in the value chain there is however still only a poorly developed understanding of how the system of innovation emerges and evolves to support this transition process and what the role of regional innovation policy is in building the regional conditions that support indigenous small and medium size enterprises smes in this transition process this paper aims at reducing this omission by analyzing the co evolution of the strategies of indigenous smes and the regional innovation system of bangalore india

resale markets and the assignment of property rights the consumption of an indivisible good causes identity dependent externalities to non consumers we analyse resale markets where the current owner designs the trading procedure but cannot commit to future actions we ask the following questions 1 doer the identity of the initial owner matter for the determination of the final consumer 2 is the outcome always efficient the major conclusion of our paper is that the irrelevance of the initial structure of property rights arises in resale processes even if there are transaction costs that hinder efficiency this result complements the coasian view where the irrelevance of the assignment of property rights is a consequence of efficiency

the magnitude of innovation by demand in a sectoral system the role of industrial users in semiconductors abstract how relevant is innovation by demand compared to innovation by other actors in a sector in quantitative terms this is a yet unanswered question the current study fills this major gap in the literature on industry studies by taking a sectoral system perspective this study is able to highlight the magnitude of innovation by intermediate user firms in a high technology sector semiconductors using a combination of different datasets patents co patents r d alliances and new ventures in semiconductors this study proposes a novel quantitative approach to assessing the magnitude of innovative activity by user firms the study reaches several findings first the magnitude of innovation by user firms as measured by patents is high in both absolute and relative terms compared to semiconductor firms and other actors in the sector second the distribution of patents among different demand segments is highly uneven third innovative user firms are highly heterogeneous in terms of size diversification and vertical integration fourth collaboration in r d and co patenting activity in semiconductors take place not just between user firms and semiconductor firms but also among user firms themselves fifth innovative user firms are quite active in entrepreneurial activity in semiconductors and their new ventures on average survive longer than spin offs or other start ups

bargaining in stationary networks we study an infinite horizon game in which pairs of players con nected in a network are randomly matched to bargain players who reach agreement are replaced by new players at the same positions in the network we show that all equilibria are payoff equivalent the payoffs and the set of agreement links converge as players become patient several new concepts mutually estranged sets partners and shortage ratios provide insights into the relative strengths of the positions in the network we develop a procedure to deter mine the limit equilibrium payoffs for all players characterizations of equitable and nondiscriminatory networks are also obtained jel c78 d85 competitive equilibrium theory assumes large and anonymous markets in which every buyer can trade with every seller underlying these assumptions are standard goods and services that may be traded at low transaction costs by agents who are not in specific relationships with one another however in many markets goods and services are heterogeneous e g cars apartments or need to be tailored to particular needs e g manufacturing inputs technical support furthermore trad ing opportunities may depend on transportation costs social relationships infor mation advertising trust technological compatibility joint business opportunities free trade agreements etc in such cases it is natural to model the market using a network where only pairs of connected agents may engage in exchange new theories are needed to explore the influence of the network structure on market outcomes many questions arise how does an agent s position in the net work determine his bargaining power and the local prices he faces who trades with whom and on what terms when are prices uniform in the network one possible conjecture is that an agent s bargaining power is determined by his relative number of connections in the network however this simple theory is implausible consider the network of four sellers located at the top nodes and nine buyers located at the bottom nodes depicted in figure 1 assume that each seller supplies one unit of a homogeneous indivisible good each buyer demands one unit of the good and all buyers have identical values for the good the buyer located in the middle has the largest number of links in the network as he is connected to each

bilateral trading in networks in many markets goods flow from initial producers to final customers travelling through many layers of intermediaries and information is asymmetric we study a dynamic model of bargaining in networks that captures these features we show that the equilibrium price demanded over time is non monotonic but the sequence of transaction prices declines over time with the possible exception of the last period the price dynamic is therefore reminiscent of fire sales and hot potato trading traders who intermediate the object arise endogenously and make a positive profit the profit earning intermediaries are not necessarily traders with many connections for the case of multilayer networks they belong to the path that reaches the maximum number of potential buyers using the minimal number of intermediaries this is not necessarily the path of the network that maximizes the probability of consumption by traders who value the most the object i e welfare

liquidity risk in sequential trading networks abstract this paper studies a model of intermediated exchange with liquidity constrained traders intermediaries are embedded in a trading network and their financial capacities are private information we characterize our model s monotone pure strategy equilibrium agents earn positive intermediation rents in equilibrium an experimental investigation supports the model s baseline predictions concerning agents strategies price dynamics and the division of surplus while private financial constraints inject uncertainty into the trading environment our experiment suggests they are also a behavioral speed bump preventing traders from experiencing excessive losses due to overbidding

efficiency and stability of a financial architecture with too interconnected to fail institutions abstract the regulation of large interconnected financial institutions has become a key policy issue to improve financial stability regulators have proposed limiting banks size and interconnectedness i estimate a network based model of the over the counter interbank lending market in the us and quantify the efficiency stability implications of this policy trading efficiency decreases with limits on interconnectedness because the intermediation chains become longer while restricting the interconnectedness of banks improves stability the effect is non monotonic stability also improves with higher liquidity requirements when banks have access to liquidity during the crisis and when failed banks depositors maintain confidence in the banking system

asymmetric auctions with resale we study first and second price auctions with resale in a model with indepen dent private values with asymmetric bidders the resulting inefficiencies create a motive for post auction trade which in our model takes place via monopoly pricing the winner makes a take it or leave it offer to the loser we show a a first price auction with resale has a unique monotonic equilibrium and b with resale the expected revenue from a first price auction exceeds that from a second price auction the inclusion of resale possibilities thus permits a gen eral revenue ranking of the two auctions that is not available when these are excluded jel d44

bargaining under two sided incomplete information the unrestricted offers case chatterjee and samuelson chatterjee k l samuelson 1987 bargaining with two sided incomplete information an infinite horizon model with alternating offers rev econ stud 54 175 192 recently examined a noncooperative game theoretic bargaining model with two sided incomplete information and an infinite horizon results were obtained from the model with the help of restrictions on agents strategies this paper examines the model without these restrictions by doing so we will gain some insight into whether these results are robust in the sense that they do not depend upon the special structure of the model and hence might provide useful theoretical foundations for applied work we find that the basic results generalize as with the restricted model we find an equilibrium in which bargaining will proceed for a finite but endogeneously determined number of stages a terminal condition on the equilibrium sequence of agents beliefs determines the properties of the equilibrium and allows compar

trading networks with price setting agents abstract in a wide range of markets individual buyers and sellers trade through intermediaries who determine prices via strategic considerations typically not all buyers and sellers have access to the same intermediaries and they trade at correspondingly different prices that reflect their relative amounts of power in the market we model this phenomenon using a game in which buyers sellers and traders engage in trade on a graph that represents the access each buyer and seller has to the traders we show that the resulting game always has a subgame perfect nash equilibrium and that all equilibria lead to an efficient allocation of goods finally we analyze trader profits in terms of the graph structure roughly a trader can command a positive profit if and only if it has an essential connection in the network thus providing a graph theoretic basis for quantifying the amount of competition among traders

speculation in standard auctions with resale in standard auctions resale creates a role for a speculator a bidder who is commonly known to have no use value for the good on sale we study this issue in environments with symmetric independent private value bidders for second price and english auctions the efficient value bidding equilibrium coexists with a continuum of inefficient equilibria in which the speculator wins the auction and makes positive profits first price and dutch auctions have an essentially unique equilibrium and whether or not the speculator wins the auction and distorts the final allocation depends on the number of bidders the value distribution and the discount factor speculators do not make profits in first price or dutch auctions

decentralized trading with private information the paper studies how asset prices are determined in a decentralized market with asymmetric information about asset values we consider an economy in which a large number of agents trade two assets in bilateral meetings a fraction of the agents has private information about the asset values we show that over time uninformed agents can elicit information from their trading partners by making small offers this form of experimentation allows the uninformed agents to acquire information as long as there are potential gains from trade in the economy as a consequence the economy converges to a pareto efficient allocation

getting prices right the impact of the market information service in uganda the market information service project in uganda collected data on prices for the main agricultural commodities in major market centers and disseminated the information through local fmradio stations in various districts exploiting the variation across space between households with and without access to a radio we find evidence suggesting that better informed farmers managed to bargain for higher farm gate prices on their surplus production

a multistage model of bargaining this paper presents a simple multistage model of bargaining wherein a seller makes an offer that can be either accepted or refused if rejected the process continues how the seller s ability to make commitments affects bargaining outcomes is analysed by comparing the commitment equilibria to those arising when commitment is impossible the effects of increasing uncertainty about preferences and varying the length of the bargaining horizon are analysed the ways in which the bargaining environment can be changed to improve outcomes are discussed

efficiency in decentralized oligopolistic markets the paper analyzes quantity competition in economies in which a network describes the set of feasible trades a model is presented in which the identity of buyers of sellers and of intermediaries is endogenously determined by the trade flows in the economy the analysis first considers small economies and provides sufficient conditions for equilibrium existence a characterization of prices and flows and some negative results relating welfare to network structure the second and central part of the analysis considers behavior in large markets and presents necessary and sufficient conditions on the network structure for equilibria to be approximately efficient when the number of players is large

sequential bargaining with incomplete information this paper describes a simple two person two period bargaining game and solves it using the concept of perfect bayesian equilibrium in which the actions of each player convey information which is used by his opponent the paper examines the effects of changes in bargaining costs the size of the contract zone and the length of the bargaining process on such aspects of the solution as the probability of impasse and the likelihood of concessions the combination of information transfer and the lack of pre commitment embodied in perfectness yields many surprising results common perceptions about the effects of parameter changes on bargaining processes are suspect and should be checked in the particular game being discussed