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Bargaining Ability and Competitive Advantage: Empirical Evidence from Medical Devices (Job Market Paper)
, 2009
"... Inmarketswherebuyersandsuppliersnegotiateprices, suppliercosts,buyerwillingnesstopay, and competition (forces strategists often refer to as sources of bargaining power) determine only a rangeof potential prices, leaving the final price dependent on other factors (e.g. negotiating skill), which I ca ..."
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Inmarketswherebuyersandsuppliersnegotiateprices, suppliercosts,buyerwillingnesstopay, and competition (forces strategists often refer to as sources of bargaining power) determine only a rangeof potential prices, leaving the final price dependent on other factors (e.g. negotiating skill), which I call bargaining ability. I use a model of buyer demand and buyersupplier bargaining, combined with detailed data on prices and quantities at the buyersupplier relationship level, to estimate firm bargaining abilities in the context of the coronary stent industry. In this industry different hospitals pay different prices for the exact same product. I estimate that variation in bargaining abilities explains 71 % of this price variation. Bargaining ability also has a significant impact on firm profitability—a 20 % increase in bargaining ability translates into an average increase in profits of 6 % for hospitals and 11 % for manufacturers. I use the estimated model to simulate a policy change proposed in the U.S. Senate that could force eachproduct to be sold at the same price to all hospitals. Contraryto the stated intentions of policy makers, my baseline estimates suggest that implementing this policy would increaseaverageprices by 9%, making 87 % ofhospitals worseoff and decreasingtotal surplus by 0.06%. Device manufacturers, however, would see their profits increase by an average of 16%.
Game theory for signal processing in networks,”
 IEEE Signal Process. Mag.,
, 2015
"... Abstract In this tutorial, the basics of game theory are introduced along with an overview of its most recent and emerging applications in signal processing. One of the main features of this contribution is to gather in a single paper some fundamental gametheoretic notions and tools which, over th ..."
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Abstract In this tutorial, the basics of game theory are introduced along with an overview of its most recent and emerging applications in signal processing. One of the main features of this contribution is to gather in a single paper some fundamental gametheoretic notions and tools which, over the past few years, have become widely spread over a large number of papers. In particular, both strategicform and coalitionform games are described in details while the key connections and differences between them are outlined. Moreover, a particular attention is also devoted to clarify the connections between strategicform games and distributed optimization and learning algorithms. Beyond an introduction to the basic concepts and main solution approaches, several carefully designed examples are provided to allow a better understanding of how to apply the described tools.
Barcelona GSE Working Paper Series Working Paper nº 633Bargaining failures and merger policy ∗
, 2012
"... In this paper we study the optimal exante merger policy in a model where merger proposals are the result of strategic bargaining among alternative candidates. We allow for firm asymmetries and, in particular, we emphasize the fact that potential synergies generated by a merger may vary substantiall ..."
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In this paper we study the optimal exante merger policy in a model where merger proposals are the result of strategic bargaining among alternative candidates. We allow for firm asymmetries and, in particular, we emphasize the fact that potential synergies generated by a merger may vary substantially depending on the identity of the participating firms. The model demonstrates that, under some circumstances, relatively inefficient mergers may take place. That is, a particular merger may materialize despite the existence of an alternative merger capable of generating higher social surplus and even higher profits. Such bargaining failures have important implications for the exante optimal merger policy. We show that a more stringent policy than the expost optimal reduces the scope of these bargaining failures and raises expected social surplus. We use a bargaining model that is flexible, in the sense that its strategic structure does not place any exogenous restriction on the endogenous likelihood of feasible mergers.
Simultaneous Nash Bargaining with Consistent Beliefs
, 2010
"... We propose and analyze a new solution concept, theRsolution, for threeperson, transferable utility, cooperative games. In the spirit of the Nash Bargaining Solution, our concept is founded on the predicted outcomes of simultaneous, twoparty negotiations that would be the alternative to the grand ..."
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We propose and analyze a new solution concept, theRsolution, for threeperson, transferable utility, cooperative games. In the spirit of the Nash Bargaining Solution, our concept is founded on the predicted outcomes of simultaneous, twoparty negotiations that would be the alternative to the grand coalition. These possibly probabilistic predictions are based on consistent beliefs. We analyze the properties of the Rsolution and compare it with the Shapley value and other concepts. The Rsolution exists and is unique. It belongs to the bargaining set and to the core whenever the latter is not empty. In fact, when the grand coalition can simply execute one of the three possible bilateral trades, the Rsolution is the most egalitarian selection of the bargaining set. Finally, we discuss how the Rsolution changes important conclusions of several well known Industrial Organization models.
Bargaining failures and merger policy∗
, 2012
"... In this paper we study the optimal exante merger policy in a model where merger proposals are the result of strategic bargaining among alternative candidates. We allow for firm asymmetries and, in particular, we emphasize the fact that potential synergies generated by a merger may vary substantiall ..."
Abstract
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In this paper we study the optimal exante merger policy in a model where merger proposals are the result of strategic bargaining among alternative candidates. We allow for firm asymmetries and, in particular, we emphasize the fact that potential synergies generated by a merger may vary substantially depending on the identity of the participating firms. The model demonstrates that, under some circumstances, relatively inefficient mergers may take place. That is, a particular merger may materialize despite the existence of an alternative merger capable of generating higher social surplus and even higher profits. Such bargaining failures have important implications for the exante optimal merger policy. We show that a more stringent policy than the expost optimal reduces the scope of these bargaining failures and raises expected social surplus. We use a bargaining model that is flexible, in the sense that its strategic structure does not place any exogenous restriction on the endogenous likelihood of feasible mergers.
Working Paper nº 521Simultaneous Nash Bargaining with Consistent Beliefs ∗
, 2011
"... We propose and analyze a new solution concept, the Rsolution, for threeperson, transferable utility, cooperative games. In the spirit of the Nash Bargaining Solution, our concept is founded on the predicted outcomes of simultaneous, twoparty negotiations that would be the alternative to the grand ..."
Abstract
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We propose and analyze a new solution concept, the Rsolution, for threeperson, transferable utility, cooperative games. In the spirit of the Nash Bargaining Solution, our concept is founded on the predicted outcomes of simultaneous, twoparty negotiations that would be the alternative to the grand coalition. A key feature of the concept is to require that these possibly probabilistic predictions are based on consistent beliefs. We also propose a noncooperative bargaining protocol that asymptotically implements the Rsolution, as discounting vanishes. We analyze the properties of the Rsolution and compare it with traditional solution concepts. The Rsolution exists and is unique. It belongs to the bargaining set and to the core whenever the latter is not empty, and is their most egalitarian selection when the grand coalition can simply execute one of the three possible bilateral trades.