Transaction Costs and the Robustness of the Coase Theorem

Luca Anderlini and Leonardo Felli

STICERD - Theoretical Economics Paper Series from Suntory and Toyota International Centres for Economics and Related Disciplines, LSE

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)
Date: 2001-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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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 (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:stitep:409

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