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What to Put on the Table

Authors: Skreta, Vasiliki
Figueroa, Nicolas
Keywords: mechanism design;multiple units;partnerships
Issue Date: Aug-2007
Series/Report no.: EC-08-11
Abstract: This paper investigates under which circumstances negotiating simultaneously over multiple issues or assets helps reduce ine¢ ciencies due to the presence of asymmetric information. We Önd that a simultaneous negotiation over multiple assets that are substitutes reduces ine¢ ciencies. The e§ect is stronger if goods are heterogeneous, and in this case the ine¢ ciency can be eliminated altogether. When assets are not substitutes ine¢ ciencies always prevail. We also study cases where co-ownership is possible (partnerships), allowing for asymmetric distributions, general valuation functions and for multiple assets. We show that e¢ cient dissolution is possible if all agents valuations at their types where gains of trade are minimal are equal: For this to hold, the agent that most likely has the highest valuation for a given asset should initially own a bigger share of that asset. We discuss implications of these Öndings for the design of partnerships and joint ventures.
Appears in Collections:Economics Working Papers

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