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Expropriation power in private dealings: Quota rule in collective sales

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  • Uyanik, Metin
  • Yengin, Duygu

Abstract

Complementarity is common in land-assembly problems, such as a developer buying the entirety of apartment units to complete a development project. Holdout (delay or block of projects by sellers) is common in these problems under unanimity-rule. Motivated by the recent policy practices in strata-sales, we introduce a new bargaining model with quota-rule. We show that under quota-rule, there is no holdout when there are two sellers or players are sufficiently patient. No-holdout equilibrium is unique, efficient and yields immediate sale of all goods as outcome. When quota rule is used, efficient equilibrium is still obtained under alternative bargaining protocols and with multiple sellers. We also show that the no-holdout result is not due to the specific bargaining protocol.

Suggested Citation

  • Uyanik, Metin & Yengin, Duygu, 2023. "Expropriation power in private dealings: Quota rule in collective sales," Games and Economic Behavior, Elsevier, vol. 141(C), pages 548-580.
    • Handle: RePEc:eee:gamebe:v:141:y:2023:i:c:p:548-580
    DOI: 10.1016/j.geb.2023.06.011
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    More about this item

    Keywords

    Collective sales; En-bloc sales; Land assembly; Complementary goods; Holdout; Quota rule; Termination threshold; Majority termination; Strata scheme; Freeze-out merger; Multilateral bargaining; Circular bargaining; Simultaneous bargaining; Efficient equilibrium;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H13 - Public Economics - - Structure and Scope of Government - - - Economics of Eminent Domain; Expropriation; Nationalization
    • K25 - Law and Economics - - Regulation and Business Law - - - Real Estate Law
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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