Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81872
Authors: 
Westermark, Andreas
Year of Publication: 
2013
Series/Report no.: 
Sveriges Riksbank Working Paper Series 266
Abstract: 
We analyze a bargaining model where there is a long-term relationship between a seller and a buyer and there is bargaining over a sequence of surpluses that arrives at fixed points in time. Markov Perfect Equilibria are analyzed and equilibrium payoffs characterized. The transfers between the players can be described as a first-order system of difference equations. Payoffs depend on both current and future surpluses. Future surpluses are important partly because the risk of separation leads to the loss of surplus today and in the future and partly because delay without separation can last into future periods. We also find conditions for existence and uniqueness of equilibria with immediate agreement.
Subjects: 
bargaining
long term relationship
JEL: 
C72
C78
Document Type: 
Working Paper

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