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Nash's Bargaining Formula Revisited
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James Gander
Published/Copyright:
June 20, 2014
Abstract
The note consists of showing the marginal rates of substitution (MRS) explicitly in Nash's product formula and contract curve given by the Jacobian determinant, which otherwise are contained therein only implicitly. Two simple examples from duopoly and bilateral monopoly are used to show the MRS's explicitly in the mathematical structure of the bargaining game. We learn from the note that, while the MRS's are implicit in the mathematical structure of the game, the MRS's after suitable transformation can be shown explicitly in the product formula and contract curve. This MRS showing puts the structure of the game in a context familiar to economists.
Published Online: 2014-6-20
Published in Print: 2014-8-30
©2014 Walter de Gruyter Berlin/Boston
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