Limit theorems for markets with sequential bargaining

Douglas Gale

    Research output: Contribution to journalArticle

    Abstract

    This paper models trade as a non-coopertative, strategic game played at an infinite sequence of dates. A single, indivisible commodity is traded. Buyers and sellers have transferable utility and are characterized by their reservation utilities. They meet at random and "bargain" over the price at which a single unit of the good will be exchanged. Under a variety of circumstances it is shown that as the costs of search and bargaining become negligible, the outcome of the game converges to the competitve (flow) equilibrium, even when there is complete information.

    Original languageEnglish (US)
    Pages (from-to)20-54
    Number of pages35
    JournalJournal of Economic Theory
    Volume43
    Issue number1
    DOIs
    StatePublished - Oct 1987

    ASJC Scopus subject areas

    • Economics and Econometrics

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