Abstract

http://ssrn.com/abstract=1022696
 
 

References (33)



 
 

Citations (3)



 


 



Can Coasean Bargaining Justify Pigouvian Taxation?


Stephanie Rosenkranz


Utrecht University - Utrecht University School of Economics; Centre for Economic Policy Research (CEPR)

Patrick W. Schmitz


University of Cologne; Centre for Economic Policy Research (CEPR)


Economica, Vol. 74, No. 296, pp. 573-585, November 2007

Abstract:     
The fact that, according to the celebrated Coase Theorem, rational parties always try to exploit all gains from trade is usually taken as an argument against the necessity of government intervention through Pigouvian taxation in order to correct externalities. However, we show that the hold-up problem, which occurs if non-verifiable investments have external effects and parties cannot be prevented from always exploiting ex post gains from trade through Coasean bargaining, may be solved by government intervention. In this sense, the impossibility of ruling out Coasean bargaining (after investments are sunk) may in fact justify Pigouvian taxation.

Number of Pages in PDF File: 13

Accepted Paper Series





Date posted: October 22, 2007  

Suggested Citation

Rosenkranz, Stephanie and Schmitz, Patrick W., Can Coasean Bargaining Justify Pigouvian Taxation?. Economica, Vol. 74, No. 296, pp. 573-585, November 2007. Available at SSRN: http://ssrn.com/abstract=1022696 or http://dx.doi.org/10.1111/j.1468-0335.2006.00556.x

Contact Information

Stephanie Rosenkranz (Contact Author)
Utrecht University - Utrecht University School of Economics ( email )
Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
+31 30 253 9806 (Phone)
+31 30 253 7373 (Fax)
HOME PAGE: http://www.uu.nl/uupublish/defaculteit/persoonlijkepagi/rosenkranz/
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Patrick W. Schmitz
University of Cologne ( email )
Albertus-Magnus-Platz
Cologne, 50923
Germany
HOME PAGE: http://schmitz.uni-koeln.de/index.php?s=mitarbeiter&t=schmitz
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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