Bargaining, competition and efficient investment

Kalyan Chatterjee, Y. Stephen Chiu

Research output: Chapter in Book/Report/Conference proceedingChapter

1 Scopus citations


This paper explores the interplay between choice of investment type (specific vs. general), bargaining extensive form and endogenous outside options in the framework of incomplete contracts introduced formally in the work of Grossman, Hart and Moore. We find that the bargaining procedure chosen has significant implications for choice of investment and for the usefulness of the assignment of property rights in enhancing efficiency. Somewhat paradoxically an “auctionlike” procedure might need the correct assignment of property rights for a more efficient solution while a sequential offers procedure might do as well as the best assignment of property rights.

Original languageEnglish (US)
Title of host publicationBargaining in the Shadow of the Market
Subtitle of host publicationSelected Papers on Bilateral and Multilateral Bargaining
PublisherWorld Scientific Publishing Co.
Number of pages18
ISBN (Electronic)9789814447577
ISBN (Print)9814447560, 9789814447560
StatePublished - Jan 1 2013

All Science Journal Classification (ASJC) codes

  • General Economics, Econometrics and Finance
  • General Business, Management and Accounting
  • General Mathematics


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