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This paper investigates under which circumstances negotiating simultaneously over multiple issues or assets helps reduce inefficiencies due to the presence of asymmetric information. We find that a simultaneous negotiation over multiple assets that are substitutes reduces inefficiencies. The effect is stronger if goods are heterogeneous, and in this case the inefficiency can be eliminated altogether. When assets are not substitutes inefficiencies always prevail. We also study cases where co-ownership is possible (partnerships), allowing for asymmetric distributions, general valuation functions and for multiple assets. We show that efficient dissolution is possible if all agents valuations at their types where gains of trade are minimal are equal. For this to hold, the agent that most likely has the highest valuation for a given asset should initially own a bigger share of that asset. We discuss implications of these findings for the design of partnerships and joint ventures. JEL classification codes: C72, D82, L14.
References listed on IDEAS
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- Ferreira, Daniel & Ornelas, Emanuel & Turner, John L., 2007. "Unbundling Ownership and Control," CEPR Discussion Papers 6257, C.E.P.R. Discussion Papers.
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- John L. Turner & Emanuel Ornelas, 2004.
"Efficient Dissolution of Partnerships and the Structure of Control,"
Econometric Society 2004 North American Summer Meetings
286, Econometric Society.
- Ornelas, Emanuel & Turner, John L., 2007. "Efficient dissolution of partnerships and the structure of control," Games and Economic Behavior, Elsevier, vol. 60(1), pages 187-199, July.
- Roger B. Myerson & Mark A. Satterthwaite, 1981.
"Efficient Mechanisms for Bilateral Trading,"
469S, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Schweizer, Urs, 2006. "Universal possibility and impossibility results," Games and Economic Behavior, Elsevier, vol. 57(1), pages 73-85, October.
- Patrick Schmitz, 2001.
"The Coase Theorem, Private Information, and the Benefits of Not Assigning Property Rights,"
European Journal of Law and Economics,
Springer, vol. 11(1), pages 23-28, January.
- Schmitz, Patrick W., 2001. "The Coase Theorem, Private Information, and the Benefits of Not Assigning Property Rights," MPRA Paper 6929, University Library of Munich, Germany.
- Makowski Louis & Mezzetti Claudio, 1994. "Bayesian and Weakly Robust First Best Mechanisms: Characterizations," Journal of Economic Theory, Elsevier, vol. 64(2), pages 500-519, December.
- Sandro Brusco & Giuseppe Lopomo & David T. Robinson & S. Viswanathan, 2007. "Efficient Mechanisms For Mergers And Acquisitions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(3), pages 995-1035, 08.
- Vijay Krishna & Motty Perry, 1997. "Efficient Mechanism Design," Game Theory and Information 9703010, EconWPA, revised 28 Apr 1998.
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