Property Rights and Inefficient Bargaining in 1970's Television

Abstract

Under property rights theory, ex-post decision rights determine the incentive regime that drives total surplus while efficient ex-post renegotiation over that surplus makes asset ownership itself irrelevant. Using the introduction of a restriction on asset ownership in the US broadcast television industry that did not alter decision rights, this paper shows causal effects inconsistent with asset ownership being irrelevant to contracting. Qualitative evidence suggests this inconsistency results from inefficient ex-post bargaining due to asymmetric ex-post information. Implications of this paper’s results include reevaluating the assumptions underlying property rights theory and the theory’s applicability in settings where bargaining may be inefficient.