Bargaining on supply chain networks with heterogeneous valuations

In this paper, we generalize the two-sided bargaining model which is developed in Manea (Am Econ Rev 101(5):2042–2080, 2011) to analyse the trade dynamics in supply chains. No further restrictions on the network structure are imposed. Both buyers and sellers can assume the role of a proposer in the bargaining game. Any finite number of buyers and sellers is allowed. More importantly, valuations of the buyers are heterogeneous. This generalized model allows us to investigate the impact of network structure and the heterogeneous pie size (resulting from heterogeneous valuations) on the equilibrium in full generality which is lack in the existing supply chain literature.