Bargaining with revoking costs

► The role of strategic commitment in bilateral bargaining is studied. ► Initial demands can be revoked at a cost, increasing in the conceded amount. ► The set of pure strategy SPE is characterized for general cost functions. ► Bargaining power is shown to increase with higher cost functions. ► Kalaiʼs (1977) Proportional Solution gives the limit SPE outcome with very high costs.