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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