What to put in the table

Nicolas Figueroa and Vasiliki Skreta

No 237, Documentos de Trabajo from Centro de Economía Aplicada, Universidad de Chile

Abstract: This paper investigates under which circumstances negotiating simultaneously over multiple issues or assets helps reduce inefficiencies due to the presence of asymmetric information. We find that a simultaneous negotiation over multiple assets that are substitutes reduces inefficiencies. The effect is stronger if goods are heterogeneous, and in this case the inefficiency can be eliminated altogether. When assets are not substitutes inefficiencies always prevail. We also study cases where co-ownership is possible (partnerships), allowing for asymmetric distributions, general valuation functions and for multiple assets. We show that efficient dissolution is possible if all agents valuations at their types where gains of trade are minimal are equal. For this to hold, the agent that most likely has the highest valuation for a given asset should initially own a bigger share of that asset. We discuss implications of these findings for the design of partnerships and joint ventures. JEL classification codes: C72, D82, L14.

Date: 2007
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: What to Put on the Table (2008)
Working Paper: What to Put on the Table (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:edj:ceauch:237

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