Contractual Incompleteness and Endogenous Enforcement: Dismantling the Coasian Bargaining Paradigm Under Asymmetric Institutional Constraints

Abstract

The Coase Theorem has long served as the axiomatic foundation for law-and-economics scholarship on private bargaining, property rights allocation, and transaction cost minimization. This article critically reassesses the theorem's prescriptive validity when applied to environments characterized by asymmetric information, endogenous enforcement costs, and incomplete contracting structures. Employing a game-theoretic framework augmented by empirical panel data drawn from 34 OECD jurisdictions (2005–2022), we demonstrate that Coasian efficiency predictions systematically fail under conditions of non-transferable utility and strategic renegotiation. Our findings suggest that wealth-maximizing outcomes are contingent upon institutional complementarities not captured by the original formulation. We propose a refined doctrinal model that integrates enforcement endogeneity into the normative calculus of liability rules and entitlement assignments, offering actionable implications for judicial policy and legislative drafting.