Coalition Formation in Legislative Bargaining

We propose a new model of legislative bargaining in which coalitions may have different values, reflecting the fact that policies they can pursue are constrained by identity coalition members. As delay between offers goes to zero, equilibrium allocation converges generalized version Nash solution which—in contrast standard solution—the winning is endogenous and determined relative coalitional values. A form holdup problem specific these games contributes generate significant inefficiencies selection coalition. The helps rationalize well-known empirical facts conflict with predictions noncooperative models bargaining.