Coase Theorem Breakdown Threatens Efficient Bargaining for Larger Groups
The article explores how the Coase theorem and transaction costs affect group interactions. They show that the Coase theorem might not work if more than two parties are involved, especially if they bring new issues. Even in a world with transaction costs, a problem with finding fair solutions can still exist. To solve this, they suggest using methods like penalty clauses and fair contracts. When a public good is shared, like in a park, there's a risk of some people not chipping in - this can complicate reaching fair agreements. The study offers tips for negotiating tricky situations when making deals with multiple players.