Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/171599 
Year of Publication: 
2012
Series/Report no.: 
Economics Working Paper Series No. 12/156
Publisher: 
ETH Zurich, CER-ETH - Center of Economic Research, Zurich
Abstract: 
We investigate the efficiency of Coasean bargaining when restrictions are placed on the set of feasible bargaining outcomes. When property rights are costly to (defend) appropriate, we find bargaining restrictions may be Pareto superior to unconstrained voluntary exchange. Under cost uncertainty over the externality, we show an efficient configuration of restrictions must balance the potential reduction in appropriation costs with the possibility of allocatively inefficient bargaining restrictions. For cases where the restrictions are contested, we show conditions for the continuing existence of welfare improvements.
Subjects: 
Coase theorem
bargaining restrictions
appropriation
JEL: 
D62
D72
K1
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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