How Status Seeking May Prevent Coasean Bargaining

Forthcoming in Review of Law and Economics

27 Pages Posted: 3 Apr 2017

See all articles by Gilles Grolleau

Gilles Grolleau

Montpellier SupAgro and Researcher at LAMETA

Alain Marciano

Université de Montpellier; Université Montpellier I - Montpellier Recherche en Economie (Montpellier Research in Economics) MRE

Naoufel Mzoughi

INRA Ecodéveloppement

Date Written: February 20, 2017

Abstract

Even in a world with zero transaction costs, status seeking can prevent efficient Coasean bargaining. Using simple illustrations and various examples, we show that ignoring this impediment can explain the failure of some negotiations where an efficient bargaining seems a priori reachable and expected. Rather than just emphasizing this neglected issue, we discuss various institutional and behavioral strategies by which this impediment can be overcome and even strategically used in socially desirable directions, such as bargaining over status.

Keywords: Bargain, Coase, Externalities, Market Failures, Positional Concerns, Status Seeking

JEL Classification: D62, D74, K10

Suggested Citation

Grolleau, Gilles and Marciano, Alain and Mzoughi, Naoufel, How Status Seeking May Prevent Coasean Bargaining (February 20, 2017). Forthcoming in Review of Law and Economics, Available at SSRN: https://ssrn.com/abstract=2943228

Gilles Grolleau

Montpellier SupAgro and Researcher at LAMETA ( email )

France

Alain Marciano (Contact Author)

Université de Montpellier ( email )

Avenue Raymond Dugrand, CS 79606
Montpellier Cedex 1, F-34000
France

Université Montpellier I - Montpellier Recherche en Economie (Montpellier Research in Economics) MRE ( email )

Montpellier
France

Naoufel Mzoughi

INRA Ecodéveloppement ( email )

Domaine Saint-Paul - Site Agroparc
Avignon cedex 9, 84914
France

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