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Date: | Tue Jul 31 09:13:49 2007 |
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One does not have to resort to radical critiques for discussions of the
problem that Hunt discusses under the title "the invisible foot." Coase
has referred to this as blackmail.
"Coase himself has been well aware of specific problems which arise from
the problem of extortion. In his original article, Coase [1960] rather
briefly touched upon the question. primarily arguing that extortion may
arise in either liability regime. In Coase [1988], he has discussed the
problem in more detail, identifying extortion as a threat to do
something which the extortioner has no other interest in doing than to
extract money from the victim." (Buchholz and Haslbeck (1997: 639).
The substance of the problem is that the assumption that a person has a
legal right to control the behavior A, which causes harm to another,
does not necessarily imply that she also has the legal right to perform
the behavior B, which has a different externally harmful effect.
Behavior A might be "to produce a good for profit from sales which, in
the process, causes pollution" while behavior B could be "to produce
pollution in order to extort a bribe."
The key to understanding Coase in this matter as in many others is that
he defines a resource as a legal right to control a behavior that has an
external effect. In this case, polluting behavior has the capacity of
generating two different types of external effects. So Coase would
analyze the problem by conceiving of two separate resources. [Polluting
aimed at extorting a bribe might be called a negative resource, like the
concept of a "bad"] A number of questions are raised by this approach
but I do not believe the one discussed in earlier emails on "Coase's
deficiencies is among them."
Buchholz, W. and C. Haslbeck. (1997)?Strategic Manipulation of Property
Rights in Coasean Bargaining.? Journal of Institutional and Theoretical
Economics. 153 (4): 630-640.
Coase, R. H.(1988) Blackmail, Virginia Law Review. 7 (4): 655-76)
Pat Gunning
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