Transaction costs and the robustness of the Coase Theorem

Luca Anderlini and Leonardo Felli

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper explores the extent to which the presence of ex-ante transaction costs may lead to failures of the Coase Theorem. In particular we identify and investigate the basic ‘hold-up problem’ which arises whenever the parties to a Coasian negotiation have to pay some ex-ante costs for the negotiation to take place. We then show that a ‘Coasian solution’ to this hold-up problem is not available. This is because a Coasian solution to the hold-up problem typically entails a negotation about the payment of the costs associated with the future negotiation which in turn is associated with a fresh set of ex-ante costs, and hence with a new hold-up problem.

Keywords: Transaction costs; Hold-up Problem; Coase Theorem; Coasian Negotiation (search for similar items in EconPapers)
JEL-codes: C70 D23 D60 D80 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2000-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://eprints.lse.ac.uk/3591/ Open access version. (application/pdf)

Related works:
Journal Article: Transaction Costs and the Robustness of the Coase Theorem (2006)
Working Paper: Transaction Costs and the Robustness of the Coase Theorem (2003)
Working Paper: Transaction Costs and the Robustness of the Coase Theorem (2003)
Working Paper: Transaction Costs and the Robustness of the Coase Theorem (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:3591

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