Through a model of repeated bargaining between a buyer and a seller, with changing
private information on both sides, this paper addresses questions of eciency and
institutional structures in dynamic mechanism design. A new technical device in the
form of a history dependent version of payo equivalence is established. A new notion
of interim budget balance is introduced which allows for the role of an intermediary
but with bounded credit lines. We then construct a mechanism, which provides a
necessary and sucient condition for eciency under interim budget balance. The
existence of a future surplus can be used as collateral to sustain eciency, and its size
determines the possibility. The mechanism also oers a simple and realistic implementation.
A characterization of ecient implementation under ex post budget balance
is also provided. Further, a characterization for the second best is presented, and
its equivalent Ramsey pricing formulation is established. A suboptimal, but incentive
compatible mechanism for the second best with intuitive properties is presented.
When property rights are 
uid, that is, the good can be shared, a folk theorem with
a simple mechanism is constructed.