Strategic Manipulation of Property Rights in Coasean Bargaining

Wolfgang Buchholz () and Christian Haslbeck

Journal of Institutional and Theoretical Economics (JITE), 1997, vol. 153, issue 4, 630-

Abstract: In a model of Coasean bargaining over externalities it is described how agents can manipulate their opponent's reservation utility by strategic actions at a pre-bargaining stage, such as the choice of a pollution technology. This may imply misallocation of resources, and opening up trade possibilities will not necessarily lead to a Pareto improvement. This problem is specific to bargaining over externalities and will never occur in the exchange of private goods. It is concluded that the government hat to supplement liability rules by additional restrictions on the agents' rights.

JEL-codes: C78 D23 D62 K11 (search for similar items in EconPapers)
Date: 1997
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