In take-it-or-leave-it vertical contracting, an equilibrium with passive beliefs may fail to exist. We argue that this problem can be alleviated by tackling the contracting stage of the game through a cooperative approach. The outcome of the take-it-or-leave-it game then coincides with the limit of the cooperative solution when the bargaining power of the downstream firms tends to zero. We argue that the cooperative approach, which requires a different interpretation of the out-of-equilibrium beliefs, is not affected by the well-known existence problems of the non-cooperative one.

Secrect Contracting and Nash-in-Nash Bargaining / Emanuele Bacchiega; Olivier Bonroy. - In: SN BUSINESS & ECONOMICS. - ISSN 2662-9399. - ELETTRONICO. - 1:11(2021), pp. 156.1-156.7. [10.1007/s43546-021-00162-6]

Secrect Contracting and Nash-in-Nash Bargaining

Emanuele Bacchiega
;
2021

Abstract

In take-it-or-leave-it vertical contracting, an equilibrium with passive beliefs may fail to exist. We argue that this problem can be alleviated by tackling the contracting stage of the game through a cooperative approach. The outcome of the take-it-or-leave-it game then coincides with the limit of the cooperative solution when the bargaining power of the downstream firms tends to zero. We argue that the cooperative approach, which requires a different interpretation of the out-of-equilibrium beliefs, is not affected by the well-known existence problems of the non-cooperative one.
2021
Secrect Contracting and Nash-in-Nash Bargaining / Emanuele Bacchiega; Olivier Bonroy. - In: SN BUSINESS & ECONOMICS. - ISSN 2662-9399. - ELETTRONICO. - 1:11(2021), pp. 156.1-156.7. [10.1007/s43546-021-00162-6]
Emanuele Bacchiega; Olivier Bonroy
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/836331
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