Open AccessTransaction Costs and the Robustness of the Coase Theorem *
Author(s) -
Anderlini Luca,
Felli Leonardo
Publication year - 2006
Publication title -
the economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.683
H-Index - 160
eISSN - 1468-0297
pISSN - 0013-0133
DOI - 10.1111/j.1468-0297.2006.01054.x
Subject(s) - coase theorem , robustness (evolution) , transaction cost , database transaction , economics , mathematical economics , law and economics , computer science , microeconomics , database , biochemistry , chemistry , gene
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 Coasian negotiation have to pay ex ante costs for the negotiation to take place. We then show that a ‘Coasian solution’ to this problem is not available: a Coasian solution typically entails a negotiation about the payment of the costs associated with the future negotiation, which in turn is associated with a fresh set of ex ante costs, and hence a new hold‐up problem.