Bargaining Dynamics Reshape Market Equilibrium, Incentivize Simultaneous Production
The paper explores how bargaining within a company affects decision-making in a competitive market. When agents negotiate with their bosses about production costs, it can lead to delays in production. This delay can be inefficient but is encouraged by the agency relationship. As the power of the bosses to commit to decisions weakens, the incentive for delays grows. Competition between companies also plays a role, with past and future actions pushing for simultaneous production, while current competition can have the opposite effect.