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The Coase Theorem, Private Information, and the Benefits of Not Assigning Property Rights


  • Schmitz, Patrick W.


Using a simple bilateral trading example with discrete valuations and costs it is demonstrated that in the presence of private information the efficiency of Coasean bargaining may be strictly enhanced if initially no property rights are assigned.

Suggested Citation

  • 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.
  • Handle: RePEc:pra:mprapa:6929

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    References listed on IDEAS

    1. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    2. Myerson, Roger B., 1982. "Optimal coordination mechanisms in generalized principal-agent problems," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 67-81, June.
    3. Schmitz, Patrick W., 2002. "Simple contracts, renegotiation under asymmetric information, and the hold-up problem," European Economic Review, Elsevier, vol. 46(1), pages 169-188, January.
    4. Illing, Gerhard, 1992. "Private Information as Transaction Costs: The Coase Theorem Revisited," Munich Reprints in Economics 19522, University of Munich, Department of Economics.
    5. Usher, Dan, 1998. "The Coase theorem is tautological, incoherent or wrong," Economics Letters, Elsevier, vol. 61(1), pages 3-11, October.
    6. Lewis, Tracy R. & Sappington, David E. M., 1989. "Countervailing incentives in agency problems," Journal of Economic Theory, Elsevier, vol. 49(2), pages 294-313, December.
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    Cited by:

    1. Garrouste, Pierre, 2008. "The Handbook of New Institutional Economics, C. Ménard, M.M. Shirley (Eds.), Springer, Dordrecht, The Netherlands. 2005, 884Â +Â xi pp., $199.00, index, ISBN: 10 1-4020-2687-0," Journal of Economic Behavior & Organization, Elsevier, vol. 67(2), pages 532-536, August.
    2. Piacquadio Paolo G. & Di Bartolomeo Giovanni & Acocella Nicola, 2009. "A simple framework for investigating the properties of policy games," wp.comunite 0059, Department of Communication, University of Teramo.
    3. 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.
    4. Nicolas Figueroa & Vasiliki Skreta, 2007. "What to put in the table," Documentos de Trabajo 237, Centro de Economía Aplicada, Universidad de Chile.
    5. Lau, M. W., 2011. "The Economic Structure of Trusts: Towards a Property-based Approach," OUP Catalogue, Oxford University Press, number 9780199602407.
    6. Madhav Aney, 2015. "Inefficiency in the shadow of unobservable reservation payoffs," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 44(4), pages 833-859, April.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • K1 - Law and Economics - - Basic Areas of Law


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