Unequal Bargaining Power as Duress? You are lost in the desert,I have water My price:Everything you own plus half your income forever You are better off if that contract is not enforceable That is relevant only where Unenforceability substitutes for a commitment strategy A way of limiting what you can pay in a bilateral monopoly And even there,my high price has some efficiency benefit It makes it more worth while being in the desert with water Looking for lost people dying of thirst ·Which is a good thing But it also makes you inefficiently reluctant to travel in the desert This is the same Coasean double causation problem as the sinking ship We can't optimize on two margins with one price Unequal Bargaining Power as Duress? • You are lost in the desert, I have water • My price: Everything you own plus half your income forever • You are better off if that contract is not enforceable • That is relevant only where • Unenforceability substitutes for a commitment strategy • A way of limiting what you can pay in a bilateral monopoly • And even there, my high price has some efficiency benefit • It makes it more worth while being in the desert with water • Looking for lost people dying of thirst • Which is a good thing • But it also makes you inefficiently reluctant to travel in the desert • This is the same Coasean double causation problem as the sinking ship • We can’t optimize on two margins with one price