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"Costly Coasian Contracts''

  • Luca Anderlini
  • Leonardo Felli

We identify and investigate the basic 'hold-up problem' which arises whenever each party to a contract has to pay some ex-ante cost for the contract to become feasible. We then proceed to show that, under plausible circumstances, a 'contractual solution' to this hold-up problem is not available. This is because a contractual solution to the hold-up problem typically entails writing a 'contract over a contract' which generates a fresh set of ex-ante costs, and hence is associated with a new hold-up problem.

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Paper provided by University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences in its series CARESS Working Papres with number 97-11.

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  9. Luca Anderlini & Leonardo Felli, 1998. "Costly coasian contracts," LSE Research Online Documents on Economics 3583, London School of Economics and Political Science, LSE Library.
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  24. Luca Anderlini & Leonardo Felli, 1996. "Costly Contingent Contracts," STICERD - Theoretical Economics Paper Series /1996/313, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  25. Barton L. Lipman, 1992. "Limited Rationality and Endogenously Incomplete Contracts," Working Papers 858, Queen's University, Department of Economics.
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