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Strategic Manipulation of Property Rights in Coasean Bargaining

Wolfgang Buchholz and Christian Haslbeck
Journal of Institutional and Theoretical Economics (JITE) / Zeitschrift für die gesamte Staatswissenschaft
Vol. 153, No. 4 (December 1997), pp. 630-640
Stable URL: http://www.jstor.org/stable/40752019
Page Count: 11
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Strategic Manipulation of Property Rights in Coasean Bargaining
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Abstract

In a model of Coasean bargaining over externalities it is described how agents can manipulate their opponent's reservation utility by strategic actions at a pre-bargaining stage, such as the choice of a pollution technology. This may imply a misallocation of resources, and opening up trade possibilities will not necessarily lead to a Pareto improvement. This problem is specific to bargaining over externalities and will never occur in the exchange of private goods. It is concluded that the government has to supplement liability rules by additional restrictions on the agents' rights.

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