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Bargaining and the timing of investment

Cripps, M.W.; (1997) Bargaining and the timing of investment. International Economic Review , 38 (3) pp. 527-546. Green open access

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Abstract

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
Open access status: An open access version is available from UCL Discovery
Publisher version: http://www.jstor.org/stable/info/2527279
Language: English
Additional information: The definitive version is available at www.blackwell-synergy.com. The online version is available via JSTOR subscription
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/16386
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