Seminar

Concordance among Holdouts

Glen Weyl (Harvard University)

June 3, 2010, 11:00–12:30

Toulouse

Room MF 323

Development Economics Seminar

Abstract

A holdout problem arises when a disparately-owned good is desired by a prospective buyer only in its entirety, as in land assembly. Market design is then crucial, as fully respecting property rights of many sellers eventually eliminates all trade. We propose a Concordance principle, inspired by the Cournot (1838) theory of concours de producteurs: divide profits by exogenously determined shares and impose a Pigouvian tax. This protects collective and approximate individual property rights while solving the holdout problem and, asymptotically, achieving full efficiency. Melding Concordance with most standard auction procedures encourages truth-telling. Extensions of our approach yield mechanisms for collaboration and public goods problems.