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Bargaining and the timing of investment

Cripps, MW; (1997) Bargaining and the timing of investment. INT ECON REV , 38 (3) 527 - 546.

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The joint determination of the timing of investment and wage bargaining is modelled. Two cases are considered: (a) There is an alternating-offer bargaining game over binding wage contracts and production is possible only when agreement is reached. (b) There are no binding contracts so revenue is divided in period-by-period bargaining post-investment. Investment can occur earlier in case (b) than in case (a) and the equilibrium in case (b) can Pareto-dominate the equilibrium with binding contracts. These conclusions depend on players' discount factors.

Type: Article
Title: Bargaining and the timing of investment
URI: http://discovery.ucl.ac.uk/id/eprint/65268
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