Smart Contracts and the Coase Conjecture
Thomas Brzustowski, Alkis Georgiadis-Harris, Balázs Szentes
American Economic Review · 2023 · Volume 113 · Issue 5
Abstract
This paper reconsiders the problem of a durable-good monopolist who cannot make intertemporal commitments. The buyer's valuation is binary and his private information. The seller has access to dynamic contracts and, in each period, decides whether to deploy the previous period's contract or to replace it with a new one. The main result of the paper is that the Coase conjecture fails: the monopolist's payoff is bounded away from the low valuation irrespective of the discount factor.
Keywords
Market Structure, Pricing, and Design: Monopoly, Asymmetric and Private Information, Mechanism Design, Economics of Contract: Theory, Monopoly, Monopolization Strategies
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