Abstract
Anyone who has taught the Coase Theorem to fresh minds has experienced first hand the wonder and admiration which it inspires, yet Coase never wrote it down, and, when others try, it probably turns out to be false or a tautology. The proposition, or propositions, called the Coase Theorem was originally developed through a series of examples (Coase, 1960). Like a judge, Coase steadfastly refused to articulate broad generalizations in his original paper. Like a judge’s opinion, for every interpretation of his paper there is a plausible alternative. Instead of trying to arrive at the ultimate answer, I will offer several conventional interpretations of the Coase Theorem and illustrate them with one of his examples. After more than twenty years of debate the conventional interpretations appear to have exhausted its meanings.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Similar content being viewed by others
Bibliography
Arrow, K. 1969. The organization of economic activity: issues pertinent to the choice of market versus non-market allocation. In The Analysis and Evaluation of Public Expenditure: the PPB System. US Congress, Joint Economic Committee, Washington, DC: GPO. Reprinted in Public Expenditure and Policy Analysis, ed. R. Haveman and J. Margolis, Chicago: Rand McNally, 1977.
Coase, R. 1960. The problem of social cost. Journal of Law and Economics 3(1), October, 1–44.
Cooter, R. 1980. How the law circumvents Starrett’s nonconvexity. Journal of Economic Theory 22(3), June, 145–9.
Cooter, R. 1982. The cost of Coase. Journal of Legal Studies 11(1), January, 1–34.
Cooter, R. and Marks, S. 1982. Bargaining in the shadow of the law; a testable model of strategic behavior. Journal of Legal Studies 11(2), 225–52.
Groves, T. 1976. Information, incentives, and the internalization of production externalities. In Theory and Measurement of Economic Externalities, ed. A.Y. Steven, London and New York: Academic Press.
Harsanyi, J.C. 1967–8. Games with incomplete information played by ‘Bayesian’ players, I–III. Management Science, Part I, 14(3), November 1967, 159–82; Part II, 14(5), January 1968, 320–34; Part III, 14(7), March 1968, 486–502.
Pigou, A.C. 1920. The Economics of Welfare. London: Macmillan. 4th edn, 1932; New York: St. Martin’s Press, 1952.
Regan, D. 1972. The problem of social cost revisited. Journal of Law and Economics 15(2), October, 427–37.
Schultze, C. 1977. The Public Use of Private Interest. Washington, DC: Brookings.
Spitzer, M. 1982. The Coase Theorem: some experimental tests. Journal of Law and Economics 25(1), 73–98.
Starrett, D. 1972. Fundamental non-convexities in the theory of externalities. Journal of Economic Theory 4(2), April, 180–99.
Editor information
Copyright information
© 1989 Palgrave Macmillan, a division of Macmillan Publishers Limited
About this chapter
Cite this chapter
Cooter, R.D. (1989). The Coase Theorem. In: Eatwell, J., Milgate, M., Newman, P. (eds) Allocation, Information and Markets. The New Palgrave. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20215-7_6
Download citation
DOI: https://doi.org/10.1007/978-1-349-20215-7_6
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-0-333-49539-1
Online ISBN: 978-1-349-20215-7
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)