Alternative bargaining solutions in asymmetric tariff rates negotiations

Abstract

The article was dedicated to the application of cooperative games tools to the particular bargaining problem. The bargaining is about tariffrates between two countries. Analysis was performed on the framework of simple market model with perfect competition within countries and bilateral monopoly relation between them. There were two bargaining schemes applied in order to calculate cooperative solutions. First was Nash bargaining solution, the second was Kalai and Smorodinsky proposition. Both methods successfully indicated cooperative solutions. Application of chosen bargaining schemes brought the conclusion that outcome of the indications of cooperative solutions strongly depends on the nature of explored economic model. The examination of influence parameters' changes proved that worsening the situation of the subject led to the decrease of its benefit in every case. In one case it also caused the decrease of benefit of the other party. (original abstract)