Sunday, 17 July 2011

Now here is an idea ........

Wife Sales

There is a new working paper out by Peter T. Leeson, Peter J. Boettke and Jayme S. Lemke, all of George Mason University. The abstract reads:
For over a century English husbands sold their wives at public auctions. We argue that wife sales were indirect Coasean divorce bargains that permitted wives to buy the right to exit marriage from their husbands in a legal environment that denied them the property rights required to buy that right directly. Wife-sale auctions identified "suitors" - men who valued unhappy wives more than their current husbands, who unhappy wives valued more than their current husbands, and who had the property rights required to buy unhappy wives' right to exit marriage from their husbands. These suitors enabled spouses in inefficient marriages to dissolve their marriages where direct Coasean divorce bargains between them were impossible. Wife sales were an efficiency-enhancing institutional response to the unusual constellation of property rights that Industrial Revolution-era English law created. They made husbands, suitors, and wives better off.
See here for a copy of the paper.

Remind me to email Alvin Roth and ask if this is an example of a repugnant market! Clearly it wasn't once. How did the market deal with problems of adverse selection?

1 comment:

Tim Worstall said...

Alvin's comment is here:

"File under 'formerly not as repugnant as now...""