Santiago Oliveros recently joined Royal Holloway from the Haas School of Business, UC Berkeley. His research interests include Microeconomic Theory and Political Economy.
We consider a model of decentralized bargaining among three parties. Parties can sell or buy votes to one another, and the party with a majority of the votes can decide to implement its preferred policy. We focus on the existence of a broker. This is a party that serves as a bridge between two parties that wouldn't negotiate directly with one another, transferring resources and voting rights among them in an indirect trade. The main result of the paper shows that under some conditions one of the parties in the legislature can endogenously emerge as a broker in equilibrium. Moreover, these conditions are generic, do not require special frictions, and include `well-behaved' (i.e., single-peaked) preference pro les.
Pedro Bordalo is co-ordinating this internal research seminar series.