Bargaining Between Collaborators of a Stochastic Project

• 成果类型: Article
• 署名作者: Ning, Z. Eddie
• 署名单位: University of British Columbia
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.70003
• 发表日期: 2025
• 页码: 366-384
• 关键词: continuous-time; MODEL; delay; alliance; games

摘要

Some projects require collaboration between firms to implement. The expected return from such a project can change over time due to evolving market conditions or the arrival of new information. Each firm may also choose an outside option rather than collaborating. In such a case, when is the joint project implemented, and how do firms split the return? To address these questions, the paper studies a continuous-time model of bilateral bargaining with a stochastic cake and outside options. I show that the combination of stochastic cake, outside options, and uneven bargaining power creates a hold-up problem that leads to insufficient delay. The joint project is implemented too early, or firms take outside options too quickly, causing both the ex-ante probability of agreement and its timing to be sub-optimal. Increasing the frequency of counteroffers, which balances bargaining power, improves efficiency by reducing the hold-up. More importantly, the paper finds that a more balanced bargaining power can lead to Pareto-improving outcomes.