Bargaining with Linked Disagreement Points

22 Pages Posted: 18 Feb 2011 Last revised: 9 Oct 2011

See all articles by Justin Leroux

Justin Leroux

HEC Montreal - Institute of Applied Economics; CIRANO

Walid Marrouch

Lebanese American University; CIRANO

Date Written: February 16, 2011

Abstract

In the context of bilateral bargaining,we deal with issue linkage by developing a two-issue-two-players cooperative bargaining model. The axioms we propose focus on the role of the disagreement points. A family of bargaining rule stands out: the monotonic equal net ratio solutions. These solutions point to Pareto efficient outcomes such that the relative gains for players are equal across issues and reward the players for improving their bargaining power over each issue. We discuss our results in light of international trade and environmental negotiations, which are often put on the bargaining table in a linked fashion.

Keywords: Multi-Issue Bargaining, Issue Linkages, Axiomatic Solutions, Disagreement Point

JEL Classification: C78, Q56

Suggested Citation

Leroux, Justin and Marrouch, Walid, Bargaining with Linked Disagreement Points (February 16, 2011). CIRANO - Scientific Publication No. 2011s-30. Available at SSRN: https://ssrn.com/abstract=1762669 or http://dx.doi.org/10.2139/ssrn.1762669

Justin Leroux

HEC Montreal - Institute of Applied Economics ( email )

3000, ch. de la Côte-Ste-Catherine
Montréal, Quebec H3T 2A7
Canada

CIRANO ( email )

2020 rue University, 25th floor
Montreal H3C 3J7, Quebec
Canada

Walid Marrouch (Contact Author)

Lebanese American University ( email )

P.O. Box 13 - 5053
Chouran-Beirut
Beirut, 1102 2801
Lebanon

CIRANO ( email )

1130 Rue Sherbrooke #1400
Montreal, Quebec H3A 2M8
Canada

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