The North American Fur Trade: Bargaining to a Joint Profit Maximum under Incomplete Information, 1804–1821

Ann Carlos and Elizabeth Hoffman

The Journal of Economic History, 1986, vol. 46, issue 4, 967-986

Abstract: We examine bargaining between the Northwest Company and the Hudson's Bay Company using recent models of bargaining under incomplete information. Two previously undisturbed bodies of correspondence are analyzed: letters between the two companies and letters between the Hudson's Bay Company and its London committee. Through merger the companies achieved a joint maximum, but the lengthy and costly bargaining process dissipated much of the potential gain through depletion of animal stocks. Achievement of a joint maximum was hindered by incomplete information, commitment to a strategy which led to bargaining breakdowns, delineation of each party's rights under law, and environmental changes.

Date: 1986
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