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Date: | Tue Jul 24 15:09:57 2007 |
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I agree with both Dierdre and Humberto about the significance of
Coase's idea, though I do think that Bob Cooter's discussion in the
New Palgrave is more subtle and useful than Dierdre gives him credit
for. When transaction costs are zero, as Dierdre (and Cooter) point
out, the So-Called Coase Theorem reduces to the simple and ancient
proposition that free exchange will continuously move property rights
to their highest valuing owner until an efficient allocation is
reached, at which point exchange ceases. I teach this material to
emphasize what I call (after his discussion of the Leroy Fibre case
in the first edition of Economic Analysis of Law) Posner's Corollary:
When transaction costs are high, an efficient allocation will be
achieved only if the law initially awards the relevant property right
to the highest valuing owner, obviating the need for prohibitively
costly transactions to move the right toward the highest valuing
owner.
Rich Adelstein
>
>BTW, McCloskey's So-called Coase Theorem and Actual Coase Theorem
>makes sense to me. In class, I use the terms Simple Coase and
>Complex Coase. Non-zero TC is definitely where the real Coase is at.
>
>Humberto Barreto
>
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