Bargaining sets in finite economies

Abstract

We provide a notion of bargaining set for a finite production economy based on a two-step veto mechanism à la Aubin (1979). We show that this bargaining set and the set of Walrasian allocations coincide. At the light of our result we refine Mas-Colell’s bargaining set for replicas of a finite economy. Our main result shows the persistence of Anderson et al.’s (1997) non-convergence of the bargaining sets to the set of Walrasian allocations. In addition, we analyze how the restriction on the formation of coalitions affects the bargaining set.