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A Rent Extraction Theory of Right of First Refusal

Albert Choi

No 759, Econometric Society 2004 Far Eastern Meetings from Econometric Society

Abstract: When a seller gives a buyer a right of first refusal, although it reduces the competing buyers' profits and creates an inefficiency, it always increases the joint profit of the seller and the right holder. Right of first refusal with a consideration (e.g., a payment from the right holder to the seller) allows the seller and the right holder to extract more surplus from the competing buyers

Keywords: Right of first refusal; bargaining; auctions (search for similar items in EconPapers)
JEL-codes: D44 K12 K22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law
Date: 2004-08-11
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