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Costly enforcement of property rights and the Coase theorem

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  • Alex Robson

    ()

  • Stergios Skaperdas

    ()

Abstract

We examine a setting in which property rights are initially ambiguously defined. Whether the parties go to court to remove the ambiguity or bargain and settle privately, they incur enforcement costs. When the parties bargain, a version of the Coase theorem holds. Despite the additional costs of going to court, other ex post inefficiencies, and the absence of incomplete information, however, going to court may be an equilibrium or ex ante Pareto-superior over settlement; this is especially true in dynamic settings whereby a court decision saves on future enforcement costs. When the parties do not negotiate and go to court the Coase theorem ceases to hold, and a simple rule for the initial assignment of rights maximizes net surplus.

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Bibliographic Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 36 (2008)
Issue (Month): 1 (July)
Pages: 109-128

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Handle: RePEc:spr:joecth:v:36:y:2008:i:1:p:109-128

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Related research

Keywords: Property rights; Coase theorem; Contests; C70; K40;

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References

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  1. Anbarci, N. & Skaperdas, S. & Syropoulos, C., 2000. "Comparing Bargaining Solutions in the Shadow of Conflict: How Norms Against Threats Can Have Real Effects," Papers, California Irvine - School of Social Sciences 00-01-19, California Irvine - School of Social Sciences.
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Citations

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Cited by:
  1. Stergios Skaperdas & Samarth Vaidya, 2007. "Persuasion as a Contest," CESifo Working Paper Series 2160, CESifo Group Munich.
  2. Stergios Skaperdas, 2006. "Bargaining Versus Fighting," Defence and Peace Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 17(6), pages 657-676.
  3. Julia Hiscock & David E. Hojman, 2004. "Where Have All the Flowers Gone? Coase Theorem Failures in English Summer Cultural Events: The Case of Sidmouth International Festival," Research Papers, University of Liverpool Management School 200406, University of Liverpool Management School.
  4. Vaidya, Samarth, 2001. "Analyzing Corruption Possibilities in the Gaze of the Media," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  5. Ian A. MacKenzie & Markus Ohndorf, 2012. "Restricted Coasean Bargaining," CER-ETH Economics working paper series 12/156, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  6. Ian A. MacKenzie & Markus Ohndorf, 2013. "Caps on Coasean Transfers," Discussion Papers Series 485, School of Economics, University of Queensland, Australia.
  7. Michael McBride & Stergios Skaperdas, 2009. "Conflict, Settlement, and the Shadow of the Future," CESifo Working Paper Series 2897, CESifo Group Munich.
  8. Ian A. MacKenzie & Markus Ohndorf, 2014. "Coasean Bargaining in the Presence of Pigouvian Taxation: Revisiting the Buchanan-Stubblebine-Turvey Theorem," Discussion Papers Series 515, School of Economics, University of Queensland, Australia.
  9. Alex Robson, 2012. "Transaction costs can encourage Coasean bargaining," Discussion Papers in Economics, Griffith University, Department of Accounting, Finance and Economics economics:201208, Griffith University, Department of Accounting, Finance and Economics.
  10. Jia, Hao & Skaperdas, Stergios & Vaidya, Samarth, 2013. "Contest functions: Theoretical foundations and issues in estimation," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 31(3), pages 211-222.
  11. Zuleta, Hernando & Villaveces, Marta Juanita & Andonova, Veneta, 2013. "Conflict and negotiation in Colombia: Are pre-donations useful?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 47(C), pages 105-117.
  12. E. Guzzini & A. Palestrini, 2012. "Coase theorem and exchangeable rights in non-cooperative games," European Journal of Law and Economics, Springer, vol. 33(1), pages 83-100, February.

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