Modeling the effect of bargaining structure on value capture

In order to understand value appropriation in a value chain, I model the bargaining over value as a cooperative game among the participating firms. As indicated in Section 2.3, a cooperative model is the best game theoretic approach for this research as it does not restrict the analysis to a mode of interaction among firms and a particular procedure of bargaining but assumes binding contracts. The following analysis is limited to value distribution under a given bargaining structure. The selection of firms that contribute to value creation, the cost of production, and the value that the value chain as a whole captures on the market are taken as given. The goal of this approach is to understand to what extent bargaining structure drives value capture and to derive strategies to enhance it.