Over the course of this semester, I have been working on two research projects which parallel each other very closely. Both look at water market exchanges (ie, people who buy and sell water), one from a Coasian perspective (ie, how changes in legislation affect markets), and the other from an Ostrom/Ellickson perspective (ie, how social norms and mores affect markets). Both these papers are being finished up and I will post links to them here, but there is an interesting connection between the two: both forms of bargaining are “bargaining under the shadow of the law.”
“Bargaining under the shadow of the law” typically refers to working within a framework established by a court (eg, how a court determines property rights). This is the “hard Coase” theorem. However, “law” need not apply to just courts; indeed, it does not. There are general rules, or laws, that develop “[From] our continual observations…
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