NONCOOPERATIVE BARGAINING IN NATURAL MONOPOLIES

The joint production of a single output from a single input by a group of potential users of a technology is usually analyzed in the literat ure using a ''cooperative'' approach. We provide an analysis for such economies by means of non-cooperative bargaining. Two bargaining model s are analyzed, one based on demands the other on proposals. We show t hat the convexity of the production function implies that subgame perf ect equilibrium outcomes of these bargaining games are coalition stabl e, (i.e., core outcomes). In the case of the proposal model, the equil ibrium outcomes yield even a full characterization of the core.