Bargaining for Assembly

Sarkar, Soumendu and Gupta, Dhritiman (2022) Bargaining for Assembly. [Working papers (or Preprints)] (Unpublished)

[thumbnail of work319.pdf]

Download (376kB) | Preview


An assembly problem refers to a situation where a buyer wants to purchase a fixed number of complementary items from sellers holding an item each. We model complementarity using graphs where nodes represent items, and edges between two nodes represent a complementary relationship between these items. The buyer wants to purchase a feasible path in the graph, i.e., a path of desired length, where the sum of valuations of the sellers owning the items do not exceed buyer’s own valuation. A seller is critical if he lies on every feasible path. We examine subgame perfect equilibria of an infinite horizon alternate-offer bargaining game between the buyer and the sellers. We show that there exist equilibria where the buyer can extract full surplus within two periods if and only if (a) there are no critical sellers and (b) there exist at least two feasible paths with minimum sum of seller valuations. We also characterize the upper bounds on buyer’s surplus when she cannot extract full surplus. Thus we characterize the trade-off between complementarity and competition in terms of buyer’s equilibrium surplus share in assembly problems.

Item Type: Working papers (or Preprints)
Keywords: Assembly | Bargaining | Competition | Complementarity, Contiguity | Holdout
Subjects: Social Sciences and humanities > Economics, Econometrics and Finance > Economics
JGU School/Centre: Jindal School of Government and Public Policy
Depositing User: Admin Library
Date Deposited: 24 Mar 2022 04:39
Last Modified: 09 Apr 2022 06:17
Official URL:


Downloads per month over past year

Actions (login required)

View Item
View Item