UNSPECIFIED (1997) Bargaining and the timing of investment. INTERNATIONAL ECONOMIC REVIEW, 38 (3). pp. 527-546. ISSN 0020-6598

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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.

Item Type:	Journal Article
Subjects:	H Social Sciences > HC Economic History and Conditions
Journal or Publication Title:	INTERNATIONAL ECONOMIC REVIEW
Publisher:	UNIV PENN
ISSN:	0020-6598
Date:	August 1997
Volume:	38
Number:	3
Number of Pages:	20
Page Range:	pp. 527-546
Publication Status:	Published
URI:	http://wrap.warwick.ac.uk/id/eprint/16513

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