Strategic Manipulation of Property Rights in Coasean Bargaining
AbstractIn 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.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.
Volume (Year): 153 (1997)
Issue (Month): 4 (December)
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Web page: http://www.mohr.de/jite
Postal: Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany
Find related papers by JEL classification:
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
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