If individuals own the right to take any action that they please, and are free to contract about behavior, will outcomes be efficient in all situations? That is, does the Coase theorem hold? We study this classic question through the lens of a non-cooperative model of contract negotiations,...

Does voluntary contracting suffice for the efficient provision of excludable public goods? Even in a complete information environment, we find that the answer is negative. The reason is that some agents may profit from not participating at the provision stage, but instead negotiate access ex post.

Decentralized government lead to inter-regional externalities. Whereas an integrated jurisdiction solves the externality problem, centralized government entails other costs--in particular a neglect for minority interests. The paper models formally the trade-off between these two forces in...