Transaction Costs and the Robustness of the Coase Theorem

@article{Anderlini2000TransactionCA,
  title={Transaction Costs and the Robustness of the Coase Theorem},
  author={Luca Anderlini and Leonardo Felli},
  journal={Wiley-Blackwell: Economic Journal},
  year={2000}
}
This paper explores the extent to which the presence of ex-ante transaction costs may lead to failures of the Coase Theorem. In particular we identify and investigate the basic 'hold-up problem' which arises whenever the parties to a Coasian negotiation have to pay some ex-ante costs for the negotiation to take place. We then show that a 'Coasian solution' to this hold-up problem is not available. This is because a Coasian solution to the hold-up problem typically entails a negotation about the… 

TRANSACTION COSTS AND THE ROBUSTNESS OF THE

This paper explores the extent to which ex ante transaction costs may lead to failures of the Coase Theorem. In particular we identify the basic hold-up problem that arises whenever the parties to a

Transaction costs can encourage Coasean bargaining

When there are three parties, instability problems brought about by the emptiness of the core of the corresponding cooperative game may cause the Coase Theorem to fail, even when other more direct

Market Quality Theory and the Coase Theorem in the Presence of Transaction Costs

Digital data is a new economic resource not only the ownership of which but also basic transaction rules on which has not yet clearly been established. As the importance of digital data increases,

Caps on Coasean Transfers

We investigate the efficiency of Coasean bargaining when transfers between agents are capped. We model a two-stage Coasean environment where, in the first stage, property rights are costly to

Cooperative Investments and the Value of Contracting

Recent articles have shown that contracts can support the efficient outcome for bilateral trade even in the face of specific investments and incomplete contracting. These studies typically considered

Transaction Costs: Economies of Scale, Optimum, Equilibrium and Efficiency – A Game Theory-Based Model of Transaction Costs

The aim of this article is to propose a core game theory model of transaction costs wherein it is indicated how direct costs determine the probability of loss and subsequent transaction costs. The

Auctions vs. Negotiations: The Effects of Inefficient Renegotiation

For the procurement of complex goods the early exchange of information is important to avoid costly renegotiation ex post. We show that this is achieved by bilateral negotiations but not by auctions.

The Bargaining Trap

I revisit the Rubinstein (1982) model for the classic problem of price haggling and show that bargaining can become a “trap,” where equilibrium leaves one party strictly worse off than if no

References

SHOWING 1-10 OF 44 REFERENCES

Costly Coasian Contracts

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,

Costly Contingent Contracts

We identify and investigate the basic ?hold-up? problem which arises whenever each party to a contingent contract has to pay some ex-ante cost for the contract to become feasible. We then proceed to

Complexity and Renegotiation: A Foundation for Incomplete Contracts

The paper considers a hold-up model where only one of n future trading opportunities will prove to be efficient, and where ex post renegotiation of the ex ante contract cannot be prevented. As the

Noncooperative Bargaining, Hostages, and Optimal Asset Ownership

This paper re-examines the effect of asset ownership on investment decisions for a joint relationship in the absence of contracts on investment levels. It obtains some results which contradict

Costly Bargaining and Renegotiation

We identify the inefficiencies that arise when negotiation between two parties takes place in the presence of transaction costs. First, for some values of these costs it is efficient to reach an

Renegotiation-Proof Implementation and Time Preferences

This paper explores how the requirement that the implementation of contracts be renegotiation-proof affects the set of contracts that can be implemented in a seller-buyer scenario in which the

Incomplete Contracts and Renegotiation

When drawing up a contract, it is often impracticable to specify all the relevant contingencies, and so contracts are typically incomplete. This paper considers the extent to which these gaps migh t

Cooperative Investments and the Value of Contracting

Recent articles have shown that contracts can support the efficient outcome for bilateral trade even in the face of specific investments and incomplete contracting. These studies typically considered

Power in a Theory of the Firm

Transactions take place in the firm rather than in the market because the firm offers agents" who make specific investments power. Past literature emphasizes the allocation of ownership as the"

Does Voluntary Participation Undermine the Coase Theorem