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 > >----------------- FOOTER TO HES POSTING ----------------- >[log in to unmask] >http://eh.net/mailman/listinfo/hes