Limit theorems for markets with sequential bargaining

Douglas Gale

doi:10.1016/0022-0531(87)90114-1

Limit theorems for markets with sequential bargaining

Douglas Gale

Research output: Contribution to journal › Article › peer-review

Abstract

This paper models trade as a non-coopertative, strategic game played at an infinite sequence of dates. A single, indivisible commodity is traded. Buyers and sellers have transferable utility and are characterized by their reservation utilities. They meet at random and "bargain" over the price at which a single unit of the good will be exchanged. Under a variety of circumstances it is shown that as the costs of search and bargaining become negligible, the outcome of the game converges to the competitve (flow) equilibrium, even when there is complete information.

Original language	English (US)
Pages (from-to)	20-54
Number of pages	35
Journal	Journal of Economic Theory
Volume	43
Issue number	1
DOIs	https://doi.org/10.1016/0022-0531(87)90114-1
State	Published - Oct 1987

ASJC Scopus subject areas

Economics and Econometrics

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10.1016/0022-0531(87)90114-1

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AB - This paper models trade as a non-coopertative, strategic game played at an infinite sequence of dates. A single, indivisible commodity is traded. Buyers and sellers have transferable utility and are characterized by their reservation utilities. They meet at random and "bargain" over the price at which a single unit of the good will be exchanged. Under a variety of circumstances it is shown that as the costs of search and bargaining become negligible, the outcome of the game converges to the competitve (flow) equilibrium, even when there is complete information.

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Limit theorems for markets with sequential bargaining

Abstract

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