What is Wrong with the Coase Theorem?
Thursday April 10, 2008
It has become clear to many that I am not a fan of the Coase theorem. But I have done a poor job of explaining exactly why the Coase theorem is lacking and should be removed from Principles classes.
Today's topic: The Coase theorem is tautological. See:
What is Wrong with the Coase Theorem?
Today's topic: The Coase theorem is tautological. See:
What is Wrong with the Coase Theorem?
Comments
Hey, I don’t mind the traffic, but why do I have to be involved?
My view on the Coase theorem is that, assuming it does what its supporters say it does, it’s still not useful in applied analysis in 99.99% of cases.
I do look forward to your posts!
To be ultra pedantic, one could argue that even when people can costlessly make all mutually beneficial arrangements, there may be no outcome at all. The core can be empty even though Pareto optima exist.
For some shameless self promotion: My own critcism of a somewhat stronger form of the Coase theorem can be found here:
http://yetanothersheep.blogspot.com/2008/04/coase-theorem-still-dead.html
The suspense is killing me!