SFB 504 discussion paper 97-05

Phillipe Jehiel
ENPC, CERAS, Paris and UCL, London
28 rue des Saints-Peres, 75007, Paris France

Benny Moldovanu
Department of Economics, University of Mannheim, Germany
Seminargebäude A5, D-68131 Mannheim

Resale Markets and the Assignment of Property Rights

An indivisible good can be consumed by one of several agents. The consumption involves identity-dependent externalities to non-consumers. Resale markets for such goods are analyzed in various institutional settings where agents cannot commit to future actions. We address the following questions: Does the identity of the original property right owner matter from the determination of the final consumer? Is the final outcome always efficient? It is shown that a negative answer to the first question is possible even if the answer to the second question is also negative.
C5 Moldovanu
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Review of Economic Studies 66(4), 19999, 971-991.
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