Bargaining around cost-benefit standards

• 成果类型: Article
• 署名作者: Guttel, Ehud; Leshem, Shmuel
• 署名单位: Hebrew University of Jerusalem; University of Southern California
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2013.03.004
• 发表日期: 2013
• 页码: 55-67
• 关键词: Cost-benefit standards; divide and conquer; Negative externalities; public goods

摘要

Injurers often purchase the property of potential victims to avoid liability or to comply with regulations. This paper shows that injurers subject to cost-benefit standards could profit from buying out victims even if they attach no value to the victims' property. Because buyouts allow injurers to take fewer precautions, a buyout of one victim produces a negative externality for the remaining victims. Injurers can consequently exploit victims, and thereby reduce social welfare, by adopting a divide-and-conquer strategy or by negotiating with victims sequentially. Perhaps surprisingly, buyouts may reduce social welfare and victims' joint profits even if victims make simultaneous or sequential take-it-or-leave-it buyout demands to the injurer. (C) 2013 Elsevier B.V. All rights reserved.