MULTILATERAL BARGAINING PROBLEMS

In many situations in economics and political science there are gains from forming coalitions but conflict over which coalition to form and how to distribute the gains. This paper presents an approach to such m ultilateral bargaining problems. A solution to a multilateral bargaini ng problem specifies an agreement for each coalition that is consisten t with the bargaining process in every coalition. We establish the exi stence of such solutions, show that they are determined by reservation prices, and characterize these reservation prices as the payoffs of s ubgame perfect equilibrium outcomes of a non-cooperative bargaining mo del. (C) 1997 Academic Press.