Take It or Leave It: Intermediation and Rent-seeking As Determined by Agents’ Toughnesses

Abstract

Within this paper, I will discuss the notion of bargaining with multiple intermediaries.I will be using the notion that the bargaining power of a firm is derived from its ability to be a tough bargainer, or to make take it or leave it offers. This notion was first introduced by Farboodi, Jarosch, and Menzio. [2] I expand upon their model, by extending it from only taking into account two toughnesses to an n-toughness type model. We find similar results in this expansion, seeing that agents with a higher bargaining power are able to act as intermediaries in the model, and to rent seek in interactions with weaker agents.