A sequential bargaining protocol for land rental arrangements

Valencia-Toledo A.; Vidal-Puga J. · Review of Economic Design (2020) · DOI: 10.1007/s10058-020-00230-7

Resumen

We consider land rental between a single tenant and several lessors. The tenant should negotiate sequentially with each lessor for the available land. In each stage, we apply the Nash bargaining solution, as a short-cut to solving non-cooperative bargaining games. Our results imply that, when all land is necessary, a uniform price per unit is more favorable for the tenant than a lessor-dependent price. Furthermore, a lessor is better off with a lessor-dependent price only when negotiating first. For the tenant, lessors’ merging is relevant with lessor-dependent price but not with uniform price.

Instituciones: Universidad Nacional de San Antonio Abad del Cusco