Coasean Bargaining Games with Stochastic Stock Externalities
AbstractThe recent approach ‘subgame consistency’ in cooperative stochastic differential games by Yeung and Petrosjan (2006) and Yeung and Petrosjan (2004) is applied to the classical Coase theorem in the presence of stochastic stock externalities. The dynamic Coasean bargaining solution is identified involving a negotiated plan of externality trade over time as well as subgame consistent Coasean liability payments flow under different assignments of property rights. The agent with the right to determine the externality has the advantage to choose his own private equilibrium as the initial condition in the dynamic system of the Coasean bargaining solution. The dynamic Coasean bargaining solution is formulated followed by an illustration showing an analytical tractable solution.
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Bibliographic InfoPaper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 229.
Length: 24 pages
Date of creation: 26 Sep 2006
Date of revision:
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Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
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dynamic cooperative games; cooperative stochastic differential games; dynamic stability; Coase theorem;
Find related papers by JEL classification:
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-10-21 (All new papers)
- NEP-GTH-2006-10-21 (Game Theory)
- NEP-RES-2006-10-21 (Resource Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Starrett, David A., 1972. "Fundamental nonconvexities in the theory of externalities," Journal of Economic Theory, Elsevier, vol. 4(2), pages 180-199, April.
- Richard A. Tybout, 1972. "Pricing Pollution and Other Negative Externalities," Bell Journal of Economics, The RAND Corporation, vol. 3(1), pages 252-266, Spring.
- Hoffman, Elizabeth & Spitzer, Matthew L, 1982. "The Coase Theorem: Some Experimental Tests," Journal of Law and Economics, University of Chicago Press, vol. 25(1), pages 73-98, April.
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