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Restricted Coasean Bargaining

Ian MacKenzie () and Markus Ohndorf ()

No 12/156, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: We investigate the efficiency of Coasean bargaining when restrictions are placed on the set of feasible bargaining outcomes. When property rights are costly to (defend) appropriate, we find bargaining restrictions may be Pareto superior to unconstrained voluntary exchange. Under cost uncertainty over the externality, we show an efficient configuration of restrictions must balance the potential reduction in appropriation costs with the possibility of allocatively inefficient bargaining restrictions. For cases where the restrictions are contested, we show conditions for the continuing existence of welfare improvements.

Keywords: Coase theorem; bargaining restrictions; appropriation. (search for similar items in EconPapers)
JEL-codes: D62 D72 K1 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2012-01
New Economics Papers: this item is included in nep-mic
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Journal Article: Restricted Coasean bargaining (2013) Downloads
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