Regulation through Collaboration: Final Authority and Information Symmetry in Environmental Coasean Bargaining

Thomas Rhoads and Jason Shogren

Journal of Regulatory Economics, 2003, vol. 24, issue 1, 63-89

Abstract: Many people see collaborative decision-making as the next wave in environmental regulation. This paper examines how two elements within collaborative processes--final authority over stakeholder negotiations and information symmetry through mandated information sharing of relative payoffs--affect the efficiency and the distribution of wealth. Using a Coasean bargaining experiment, we find final authority for stakeholders is critical for efficient negotiations. Efficiency drops by two-thirds given a 10 percent risk to the final authority given symmetric information. Efficiency declines further once asymmetric information is considered. Final authority appears to be a necessary but not sufficient condition for efficient agreements. Copyright 2003 by Kluwer Academic Publishers

Date: 2003
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