This note reexamines the connection between the asymmetric Nash bargaining solution and the equilibria of strategic bargaining games. Several papers in the literature obtain the asymmetric Nash bargaining solution as the unique limit of subgame perfect equilibria in stationary strategies when...

We propose a model on strategic formation of communication networks with (i) link specificity: the more direct links somebody maintains, the less she can specify her attention per link, the lower her links’ value, while this negative externality was previously ignored in the communication...

This paper uses a dynamic stochastic model to solve for the optimal pricing policy of themusic recording companies in the presence of P2P file-sharing networks eroding their CDsales. We employ a policy iteration algorithm on a discretized state space to numericallycompute the optimal price...

We consider non-cooperative multilateral bargaining games with endogenous bargaining protocols.Under an endogenous protocol, the probability with which a player becomes the proposer in a roundof bargaining depends on the identity of the player who previously rejected. An important exampleis the...

When the asset market is incomplete, competitive equilibria are constrained suboptimal, which provides scope for Pareto improving interventions. Price regulation can be such a Pareto improving policy, even when the welfare effects of rationing are taken into account. An appealing aspect of price...

The paper addresses the following question: how efficient is the market system in allocating resources if trade takes place at some prices $p$ that are not necessarily competitive? Even though there are many partial answers to this question, an answer that stands comparison to the rigor by which...

There is an extensive litarature claiming that it is often difficult to make use of arbitrage opportunities in financial markets. This paper provides a new reason why existing arbitrage opportunities might not be seized. We consider a world with short-lived securities, no short-selling...

Stochastic games offer a rich mathematical structure that makes it possible to analyze situations with heterogeneous and interacting economic agents. Depending on the actions of the economic agents, the economic environment changes from one period to another. We focus on stationary equilibrium,...

The general equilibrium model with incomplete asset markets provides a unified framework for many problems in finance and macroeconomics. In its simplest version with only two time periods and a single physical commodity the model is ideally suited for the study of problems in cross sectional...

At arbitrary prices of commodities and assets, fix-price equilibria exist under weak assumptions: endowments need not satisfy an interiority condition, utility functions need only satisfy are very weak monotonicity requirement, and the asset return matrix allows for redundant assets. Prices of...