How to negotiate with Coase?
This article analyses the bargaining side of the Coase theorem in a 3-player strategic framework. We consider several bilateral bargaining protocols between two firms polluting one household (the victim). Our results show that when property rights are given to the victim, he prefers to bargain separetely and simultaneously with the two firms. However when property rights are given to the firms, they prefer to bargain sequentially with the household. This last configuration yields a non optimal outcome and invalidates the bargaining Coase theorem.
|Date of creation:||2011|
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