Bargaining Power and Equilibrium Consumption
Swiss Federal Institute of Technology Zurich, (CER-ETH); Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Centre for Economic Policy Research (CEPR)
Hans H. Haller
Virginia Polytechnic Institute & State University - Department of Economics
CESifo Working Paper Series No. 1448
We examine how a shift of bargaining power within households operating in a competitive market environment affects equilibrium allocation and welfare. If price effects are sufficiently small, then typically an individual benefits from an increase of bargaining power, necessarily to the detriment of others. If price effects are drastic the welfare of all household members moves in the same direction when bargaining power shifts, at the expense (or for the benefit) of outside consumers. Typically a shift of bargaining power within a set of households also impacts upon other households. We show that each individual of a sociological group tends to benefit if he can increase his bargaining power, but suffers if others in his group do the same.
Number of Pages in PDF File: 38
Keywords: household behavior, bargaining power, local and global changes, price effects, general equilibrium
JEL Classification: D10, D50, D62, D70working papers series
Date posted: April 25, 2005
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