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Bargaining power and equilibrium consumption

Gersbach, Hans ; Haller, Hans

In: Social Choice and Welfare, 2009, vol. 33, no. 4, p. 665-690

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    Title
    • Bargaining power and equilibrium consumption
    Author
    • Gersbach, Hans. CER-ETH, Center of Economic Research at ETH Zurich, Zürichbergstrasse 18, 8092, Zurich, Switzerland
    • Haller, Hans. Department of Economics, Virginia Polytechnic Institute and State University, 24061-0316, Blacksburg, VA, USA
    Document Type
    • Postprint
    Classification
    • Social sciences
    OAI-PMH Identifier
    • oai:doc.rero.ch:313217
    Summary
    We examine how a shift of bargaining power within households operating in a competitive market environment affects equilibrium allocation and welfare. If price effects are sufficiently small, then typically an individual benefits from an increase of bargaining power, necessarily to the detriment of others. If price effects are drastic, the welfare of all household members moves in the same direction when bargaining power shifts, at the expense (or for the benefit) of outside consumers. Typically a shift of bargaining power within a set of households also impacts upon other households. We show that each individual of a sociological group tends to benefit, if he can increase his bargaining power, but suffers if others in his group do the same