This paper explores conditions under which economic agents will want to bargain collectively instead of individually with a common third party -- when, for example, two firms (or unions), who are bargaining with the same outside party, will want to merge and bargain as one. I use an N-person sequential bargaining model of a production economy to analyze this question. Previous work has shown that agents prefer to bargain collectively if they are substitutes for each other in production. This result, however, depends on an exogenously fixed bargaining procedure. I allow the bargaining procedure to be determined endogenously and investigate how incentives for collective bargaining vary with transaction costs and heterogeneity. The previous results are not robust even when agents are substitutes. In particular, agents prefer individual to collective bargaining if they are heterogeneous and sufficiently patient. In the presence of transaction costs, substitutability of agents is no longer the sole determinant of collectivization. Rather, the degree of heterogeneity in production, in conjunction with the degree of substitutability between agents determine the incentives for collective action.

This paper analyzes a decentralized search and matching economy comprised of heterogeneous agents. It explores whether Becker's assortative matching result generalizes to an economy where agents engage in costly search. The paper looks at a model with additive search costs and transferable utility, gives a general proof of equilibrium existence and provides sufficient conditions under which equilibrium matching is assortative. In an economy with additive search costs, complementarities in joint production (supermodularity of the joint production function) leads to assortative matching. This is in contrast to previous literature which had shown that in a search economy with discounting,assortative matching may fail even when the joint production function is supermodular.

This paper explores sufficient conditions for a continuous stationary Markov optimal policy and a concave value function in stochastic dynamic programming problems. Also, the paper addresses conditions needed for the differentiability of the value function. The paper uses conditions such as first order stochastic dominance, second order stochastic dominance and concave stochastic dominance that are widely applied in economics.

In a two-sided search market agents are paired to bargain over a
unit surplus. The matching market
serves as an endogenous outside option for agents in a bargaining
relationship. Behavioral agents are (strategically inflexible) commitment types that
demand a constant portion of the unit surplus. The steady state frequency of behavioral types in the
market is determined in equilibrium. We show, even if behavioral types are
negligible, they substantially effect the terms of trade and
efficiency. In an unbalanced market where the entering flow of one
side is short, bargaining follows equilibrium play in a bargaining
game with one-sided reputation, the terms of trade are determined by
the commitment types on the short side, and commitment types improve
efficiency. In a balanced market where the entering flows of the two
sides are equal, bargaining follows equilibrium play in a bargaining
game with two-sided reputation and commitment types cause
inefficiency. An inefficient equilibrium with persistent delays and
break-ups is constructed. The magnitude of inefficiency is
determined by the inflexible demands of the commitment types and is independent
of the fraction of the commitment types entering the market.

Previous work shows that reputation results may fail in repeated games with long-run players with equal discount factors. We restrict attention to stage games where two players, with equal discount factors, move sequentially. A pure Stackelberg action is assumed to exist. One and two sided reputation results are provided. If one of the players is a Stackelberg type with positive probability, then that player receives the highest individually rational payoff in all perfect equilibria, as agents become patient. If both players are Stackelberg types with positive probability, then equilibrium payoffs converge to a unique payoff vector; and the equilibrium play converges to the unique equilibrium of a continuous time war of attrition. All results generalize to simultaneous move stage games, if the stage game is a game of strictly conflicting interest.

Previous work shows that reputation results may fail in repeated
games between two long-run players with equal discount factors. We
restrict attention to an infinitely repeated game where two players
with equal discount factors play a stage game where actions are
imperfectly observed and the first mover advantage is maximal. The
set of types for player 1 is taken as any countable subset of the
set of all finite automaton. In this context a one sided reputation
result is provided. If player 1 is a Stackelberg type with positive
probability and player 2's actions are imperfectly observed, then
player 1 receives the highest individually rational payoff in all
Bayes Nash equilibria, as agents become patient.

This paper shows that all perfect Bayesian equilibria of a dynamic matching game with two-sided incomplete information of independent private values variety converge to competitive equilibria. Buyers purchase a bundle of heterogeneous, indivisible goods and sellers own one unit of an indivisible good. Buyer preferences and endowments as well as seller costs are private information. Agents engage in costly search and meet randomly. The terms of trade are determined through bilateral bargaining between buyers and sellers. The paper considers a market in steady state. It is shown that as frictions disappear, i.e., as discounting and the fixed cost of search become small, all equilibria of the market game converge to perfectly competitive equilibria.

This paper considers a frictional market where ex-ante heterogeneous buyers and sellers, with unit demand and supply, search for trading opportunities. The market is in a steady state and the distribution of buyers and sellers present in the market is endogenously determined through voluntary entry and exit. If search frictions are modelled as explicit additive search costs which are equal across all agents, then an efficient search equilibrium exists.

This paper analyzes a decentralized search and matching economy comprised of heterogeneous agents. The paper looks at a model with additive search costs and transferable utility, gives a general proof of equilibrium existence and shows that perfect assortative matching is the unique equilibrium in the limit economy as search frictions disappear.