What counts as duress? Your ship is sinking.The tug wants to charge you most of what it is worth You agree.When you get back to shore,can you renege on the contract? ·Is this duress? Unlike the mugging case,the effect of the incentive on the tug is good What is the efficient price for saving the ship? The price that gives the tugboat the right incentive to be out there? The price that gives you the right incentive not to go out in bad weather? This is Coase's dual causation problem Bargaining over an enforceable contract on a sinking ship Is a bilateral monopoly game Bargaining breakdown means the ship sinks Which is an argument against an enforceable contract Either have the salvage price set by the admiralty court or Bargained in advance between the ship owner and the tug owner Looks very much like the water in the desert caseWhat counts as duress? • Your ship is sinking. The tug wants to charge you most of what it is worth • You agree. When you get back to shore, can you renege on the contract? • Is this duress? • Unlike the mugging case, the effect of the incentive on the tug is good • What is the efficient price for saving the ship? • The price that gives the tugboat the right incentive to be out there? • The price that gives you the right incentive not to go out in bad weather? • This is Coase’s dual causation problem • Bargaining over an enforceable contract on a sinking ship • Is a bilateral monopoly game • Bargaining breakdown means the ship sinks • Which is an argument against an enforceable contract • Either have the salvage price set by the admiralty court or • Bargained in advance between the ship owner and the tug owner • Looks very much like the water in the desert case