Smart Contracts and the Coase Conjecture
AbstractThis paper reconsiders the problem of a durable-good monopolist who cannot make intertemporal commitments. The buyer's valuation is binary and his private information. The seller has access to dynamic contracts and, in each period, decides whether to deploy the previous period's contract or to replace it with a new one. The main result of the paper is that the Coase conjecture fails: the monopolist's payoff is bounded away from the low valuation irrespective of the discount factor.
CitationBrzustowski, Thomas, Alkis Georgiadis-Harris, and Balázs Szentes. 2023. "Smart Contracts and the Coase Conjecture." American Economic Review, 113 (5): 1334-59. DOI: 10.1257/aer.20220357
- D42 Market Structure, Pricing, and Design: Monopoly
- D82 Asymmetric and Private Information; Mechanism Design
- D86 Economics of Contract: Theory
- L12 Monopoly; Monopolization Strategies