Location of an undesirable facility on a network: A bargaining approach

We examine a model where, on a line network, individuals collectively choose the location of an undesirable public facility through bargaining with the unanimity rule. We show the existence of a stationary subgame perfect equilibrium and the characterization of stationary subgame perfect equilibria when the discount factor is sufficiently large. Furthermore, we show that as the discount factor tends to 1, the equilibrium location can converge to a location that is least desirable according to both the Benthamite and Rawlsian criteria.

► We examine the collective choice of the location of an undesirable public facility.
► The collective choice is made through bargaining with the unanimity rule.
► We show the existence of an SSPE and the characterization of SSPEs.
► The equilibrium location can be least desirable according to the Benthamite criterion.
► The equilibrium location can be least desirable according to the Rawlsian criterion.