1.1MOTIVATION AND BACKGROUND INTRODUCTION
In the stage of globalization, the negation mechanism in terms of bilateral and multilateral seems to be more and more important no matter when it comes to the government authority, private sector or even people’s behaviors. Nowadays, lots of projects are involved in multinational cooperation and implemented by means of complicated negotiation. Multilateral negotiation was used to be mostly applied in international affairs such as trade negotiation in terms of WTO or G8 summit, imposing a sanction to deal with the nuclear crisis through UN. However, pure multilateral negotiation seems to be inefficient. Therefore, when people are conducting multilateral negotiation problems, they will still proceed with the negotiation by bilateral approach.
Voting mechanism can be viewed as an efficient way to deal with disputes;
however, people will do their best to avoid this procedure in a open discussion space since the majority rule often sacrifices the minority’s profit. Therefore, establishing a well-functioned negotiation mechanism is very crucial so far. In WTO, when it comes to a new member application, the first thing has to do is bilateral negotiation that each member can require to proceed with a trade negotiation with the new applicant in specific filed such as how to regulate the tariff or decrease the trade obstacles when foreigner products get into the domestic market. Each member can enjoy the applicant’s promise resulted from the bilateral negotiation, that is so-called “Most Favored Nation” (MFN). If the application process follows the traditional voting mechanism just like UN does, the applicant would be dominated by some countries that have great power or influence. In order to enter this organization, the applicant has to make some promise to the big country but those promises can’t be shared with other members. Therefore, unanimity rule or consensus rule are tend to replace the
traditional voting mechanism regarding to public affairs.
Negotiation can be viewed as a kind of bargaining and participates’ chips would not only be money but other resources. However, it used to has a crucial assumption that the target we are bargaining for should be owned by someone, that is ownership, when it comes to bargaining mechanism. Nevertheless, in reality, more and more object’s ownership can’t be granted to specific parts. The most usual case is the dispute of countries’ territory and how to define the usage of public goods. An example here is the dispute of Angling Island between Japan, Taiwan and Mainland China. In this case, each of three countries declared that it has the sovereignty over this land and such declaration causes that no one dare to develop the nature resource in this land. In the past, unit sector spent lots of time on communication but how to trigger the negotiation process is the crucial point.
1.2PURPOSE OF RESEARCH
Although multilateral negotiation can deal with the inequality problem in terms of majority rule, this mechanism sometimes seems to be inefficient especially when it comes to political disputes or non-ownership problem. Above all, establishing a more efficient bargaining strategy to trigger the negotiation process is very crucial.
Therefore, the purpose of this paper can be divided into the following parts:
1. Briefly examine the current approaches to analysis multilateral interaction.
2. Aims to apply different bargaining strategies in terms of negotiation agendas into a real business case and compare the pro and con in different scenarios.
3. Analyze the coopering relationship between the final good producers and reversed logistic suppliers with respect to the green supply chain management.
4. Understanding the participant’s decision-making strategy in different scenarios with different negotiation agenda.
1.3RESEARCH APPROACH
This paper mainly focuses on the game theory application. Based on the game theory assumption, we concretize the conceptual structure as a two-stage game that introduces the relationship between firm’s strategies and scenarios: At first , each participant’s scale has to be determined which derives the market structure; after determining the market structure, each participant will decide its output that maximizes its profit. We will apply different bargaining targets into different market structure and compare with the final decision outcome that each firm will make.
1.4RESEARCH PROCEDURE
1. Problem definition
Initializing the problem we are going to discuss through the background introduction. Survey several proper methodologies to proceed with the further research and derives an expecting goal of this research.
2. Literature review
Reviewing the related papers in multilateral interaction, policy making, game theory and bargaining mechanism to concretize the fundamental framework of this research.
3. Decide the methodology
Based on the literature review, we use game theory to analysis the process of decision-making in terms of multilateral negotiation and look forward to establishing a more efficient bargaining mechanism to deal with the problem of non-ownership.
4. Propose the conceptual framework
Combining current bargaining strategies proposed by the literature and multilateral game theory into a new conceptual bargaining mechanism. We then try to induce the participants’ decision rule in this new mechanism.
5. Results and analysis
Based on the mathematical derivation, we can realize what kind of strategy that each participant will make in different scenarios and compare with the efficiency among them.
6. Conclusions and suggestion
Based on the comparison, we will interpret the decision making rule and evaluate the efficiency of newly-established mechanism, providing some suggestion to the future research.
Multilateral interaction
Decision making rule
Game theory application Bargaining
mechanism
Conclusions and suggestion Results and
analysis
Propose the conceptual framework Decide the methodology Literature review
Problem
Figure 1. Research procedure
CHAPTER 2 LITERATURE REVIEW