It is well-established that in bargaining under complete information, two agents reach an agreement immediately. I assume that nature selects a state that favors one or the other, and the agents may not know the state with probability ε, inducing higher- order uncertainty. A unique equilibrium...

We study bilateral bargaining problems with interested third parties, the stakeholders that enjoy benefits upon a bilateral agreement. We explore the strategic implications of this third party involvement. Our main finding is that the potential willingness of the stakeholder to make...

According to conventional wisdom internationally mobile capital should not be taxed or should be taxed at a lower rate than labour. An important underlying assumption behind this view is that there are no market imperfections, in particular that labour markets clear competitively. At least for...

We offer a unified framework to analyze the determination of employment, employee effort, wages, profit-sharing and capital structure when firms face stochastic revenue shocks. We apply a generalized Nash bargaining solution, which extends the wage bargaining literature by incorporating...

Firing frictions and renegotiation costs affect worker and firm preferences for rigid wages versus individualized Nash bargaining in a standard model of equilibrium unemployment, in which workers vary by observable skill. Rigid wages permit savings on renegotiation costs and prevent workers from...

This paper examines the behavior of dual jobholders to test a simple model of wage bargaining and wage posting. We estimate the sensitivity of wages and separation rates to wage shocks in a worker's secondary job to assess the degree of bargaining versus wage posting in the labor market. We...

We present a simple model describing the relationship between two main effects of vertical integration - raising rivals' costs (RRC) and elimination of double marginalization (EDM) - in a differentiated product setting. We find that RRC and EDM are intrinsically linked: the same force creates an...