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Steven G. Medema - One of the best experts on this subject based on the ideXlab platform.
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The Coase Theorem Down Under: Revisiting the Economic Record Controversy
History of Economics Review, 2016Co-Authors: Steven G. MedemaAbstract:This article examines the debate over the Coase Theorem that played out in the Economic Record during the 1970s. This case is uniquely illustrative of the issues with which economists and legal scholars grappled in assessing the Coase Theorem’s correctness, relevance, and applicability to legal and economic policy questions and provides insight into the larger set of issues that surrounded the diffusion of the Coase Theorem in the economics profession and literature – including its lack of stabilised meaning.
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debating law s irrelevance legal scholarship and the Coase Theorem in the 1960s
Texas A&M Law Review, 2014Co-Authors: Steven G. MedemaAbstract:This paper examines the diffusion of Coase’s negotiation result -- now better known as the 'Coase Theorem' -- in the legal literature during the 1960s, with particular attention paid to the challenge that this result posed for received legal thinking, how the it related to far older attempts to bring economic thinking to bear on the law, how legal scholars utilized it in their analysis, and how the treatment of this result by legal scholars compares to that accorded it by economists during this formative stage in the Coase Theorem’s history. What will emerge, in the end, is an enhanced understanding of how the Coase Theorem came to have a place in legal scholarship, as well as some additional insight into this neglected epoch in the history of the economic analysis of law.
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‘A magnificent business prospect . . .’ the Coase Theorem, the extortion problem, and the creation of Coase Theorem worlds
Journal of Institutional Economics, 2014Co-Authors: Steven G. MedemaAbstract:AbstractThe Coase Theorem, circa the 1970s, had no settled meaning or content; instead, that meaning and content was created – and in differing ways – by the modeling choices of scholars who attempted to grapple with and assess the proposition that Coase had laid out in 1960. These modeling decisions included both the theoretical frameworks laid onto the Theorem and the assumptions (including meanings ascribed thereto) said to underlie it. The present article illustrates this using the 1960s and 1970s extortion debate as a backdrop, showing how conclusions reached regarding the Theorem's validity hinged on the Coase Theorem worlds created by the authors involved.
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the curious treatment of the Coase Theorem in the environmental economics literature 1960 1979
Review of Environmental Economics and Policy, 2014Co-Authors: Steven G. MedemaAbstract:This article examines the first two decades of the history of the Coase Theorem in environmental economics, a period during which the Theorem's validity was widely acknowledged but its relevance for economic analysis of environmental issues was almost universally dismissed. The repeated claims of the Theorem's irrelevance and its dismissive treatment in the literature raise the question of why environmental economists were so interested in the Coase Theorem in the first place. Several explanations are offered here including the roots of environmental economic theory in the theory of externalities, economists' fascination with the interesting and challenging theoretical puzzle posed by the Theorem, and the normative and ideological thrust that permeated discussions of the Theorem, both within and outside the field of environmental economics. (JEL: B20, D62, K32, Q50, R11) Copyright 2014, Oxford University Press.
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The Curious Treatment of the Coase Theorem in the Environmental Economics Literature, 1960–1979
Review of Environmental Economics and Policy, 2014Co-Authors: Steven G. MedemaAbstract:This article examines the first two decades of the history of the Coase Theorem in environmental economics, a period during which the Theorem's validity was widely acknowledged but its relevance for economic analysis of environmental issues was almost universally dismissed. The repeated claims of the Theorem's irrelevance and its dismissive treatment in the literature raise the question of why environmental economists were so interested in the Coase Theorem in the first place. Several explanations are offered here including the roots of environmental economic theory in the theory of externalities, economists' fascination with the interesting and challenging theoretical puzzle posed by the Theorem, and the normative and ideological thrust that permeated discussions of the Theorem, both within and outside the field of environmental economics. (JEL: B20, D62, K32, Q50, R11) Copyright 2014, Oxford University Press.
Francesco Parisi - One of the best experts on this subject based on the ideXlab platform.
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the Coase Theorem
2013Co-Authors: Richard A Posner, Francesco ParisiAbstract:This two-volume collection provides an overview of essential works for understanding one of the most important contributions to the field of law and economics: the Coase Theorem. A variety of prominent scholars contribute crucial essays, each exploring different aspects of Coase’s work. Volume I explores the origins, restatements and extensions of Coase’s Theorem and contains subsections on sources, positive restatements, normative corollaries, ‘Coaseanism’, and Coase’s intellectual legacy. Volume II considers criticisms and applications of the Coase Theorem covering surveys and applications, Coasean Bargaining, Coase and the Constitution, political markets, liability, critiques, and experimental testing of the Theorem.
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toward an asymmetric Coase Theorem
European Journal of Law and Economics, 2011Co-Authors: Barbara Luppi, Francesco ParisiAbstract:Various reformulations of the Coase Theorem have developed normative corollaries on the choice of optimal remedies in the presence of positive transaction costs. In this article, we consider the extent to which these propositions are affected by the presence of asymmetric transaction costs, and we offer a reformulation of the Coase Theorem which takes into account asymmetrical transaction costs. Our analysis combines several insights from the existing literature on property-type vesus liability-type remedies, identifying the conditions for the superiority of each type of remedy. Further, we consider the possible use of mixed remedies and identify the optimal scope of such solution.
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political Coase Theorem
Public Choice, 2003Co-Authors: Francesco ParisiAbstract:This article considers the applicability of the Coase Theorem (in both its positive and normative formulations) to the political market. The article analogizes the choice of decision rules in the political market to the choice of legal rules in the traditional Coase Theorem and further analogizes alternative initial coalitions to the different initial allocations of entitlements considered by Coase (1960). On the basis of these analogies, the paper examines the relevance (or lack thereof) of alternative voting rules and initial coalitions on the final political outcome. The article further shows that, if all voters are allowed to enter into Coasian bargaining over the policy outcome to be adopted by the majority coalition (i.e., if political bargains are possible and are enforceable), uniqueness and stability are obtained. The analysis of the axiomatic Nash bargaining equilibrium yields an interesting geometric intuition. If voters have similar utility functions centered around different ideal policy points, the Coasian bargaining will be conducive to the "center of mass" of the policy space, which weighs the agents' preferences as revealed in the bargaining process. Such ideal equilibrium satisfies most criteria of social welfare. The article concludes considering the various practical limits of this ideal political market, whenever collective action and agency problems affect the political bargaining in a representative or direct democracy. Copyright 2003 by Kluwer Academic Publishers
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Political Coase Theorem
Public Choice, 2003Co-Authors: Francesco ParisiAbstract:This article considers theapplicability of the Coase Theorem (in bothits positive and normative formulations) tothe political market. The articleanalogizes the choice of decision rules inthe political market to the choice of legalrules in the traditional Coase Theorem andfurther analogizes alternative initialcoalitions to the different initialallocations of entitlements considered byCoase (1960). On the basis of theseanalogies, the paper examines the relevance(or lack thereof) of alternative votingrules and initial coalitions on the finalpolitical outcome. The article furthershows that, if all voters are allowed toenter into Coasian bargaining over thepolicy outcome to be adopted by themajority coalition (i.e., if politicalbargains are possible and are enforceable),uniqueness and stability are obtained. Theanalysis of the axiomatic Nash bargainingequilibrium yields an interesting geometricintuition. If voters have similar utilityfunctions centered around different idealpolicy points, the Coasian bargaining willbe conducive to the ``center of mass'' of thepolicy space, which weighs the agents'preferences as revealed in the bargainingprocess. Such ideal equilibrium satisfiesmost criteria of social welfare. Thearticle concludes considering the variouspractical limits of this ideal politicalmarket, whenever collective action andagency problems affect the politicalbargaining in a representative or directdemocracy. With all side payments prohibited,there is no assurance that collectiveaction will be taken in the most productiveway. (James M. Buchanan and Gordon Tullock, 1962)
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the asymmetric Coase Theorem dual remedies for unified property
2001Co-Authors: Francesco ParisiAbstract:This paper builds upon the existing literature on non-conforming property rights, suggesting that property is affected by a one-directional bias leading towards increasing fragmentation. This bias is the result of asymmetric transaction and strategic costs. In this context, the paper offers a revised formulation of the normative Coase Theorem to define more precisely optimal remedies in situations characterized by asymmetric transaction and strategic costs. I formulate an efficiency hypothesis, suggesting that courts and legislators consider the asymmetric effects of property fragmentation when choosing among alternative legal remedies. This framework further explains some of the apparent anomalies in the comparative law of remedies. Property division creates asymmetric transaction costs: unlike ordinary transfers of rights from one individual to another, reunifying fragmented property rights usually involves transaction and strategic costs higher than those incurred in the original deal (Parisi, Schulz and Depoorter, 2000). Such costs increase monotonically with the extent of fragmentation. In the realm of non-conforming property arrangements, this monotonicity generates a one-directional stickiness in the transfer of legal entitlements. Even reversing a simple property transaction can result in monopoly pricing by the buyer-turned-seller; reunifying property that has been split among multiple parties engenders even higher costs given the increased difficulty of coordination among the parties and the increased opportunity for strategic pricing by the multiple sellers. This paper revisits the normative implications of the Coase Theorem and considers the choice of optimal rules and remedies in the presence of asymmetric transaction costs.
Frank T Lorne - One of the best experts on this subject based on the ideXlab platform.
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the fourth Coase Theorem state planning rules and spontaneity in action
Planning Theory, 2015Co-Authors: Frank T LorneAbstract:This article elucidates a novel and powerful Fourth Coase Theorem using Coase’s own reasoning and extending the First Coase Theorem. It holds that state rules, which include, but are not limited to, property rights, can enlarge a market. This Theorem lends support to state planning insofar as it establishes rules that enable and promote market transactions and illuminates the operation of the market’s spontaneity, subject to constraints. Seven conditions that demarcate the state’s role under this Theorem from interventionist planning by edict are specified and illustrated by three well-researched real-life examples, one revealed by Coase and two others involving rights conferred by the state by licensing and zoning for maritime resources and by franchising for ordering land-use transport.
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the Coase Theorem and planning for sustainable development
Town Planning Review, 2006Co-Authors: Frank T LorneAbstract:This paper discusses the potential contribution and limitations of the Coase Theorem to the theorisation of sustainable development. The Coase Theorem can be manifested in numerous ways beyond the hypothetical example of direct negotiation between the polluters and the pollutees. Sustainable development not only provides a negotiative context, an infrastructure where compensation in the Coasian sense can be made, but also a framework for transforming negative externalities into positive externalities, as illustrated by a real life example from Canada. Central to the framework is a change in the mindsets of parties to a negotiation and Schumpeterian innovations.
Connie W Y Hung - One of the best experts on this subject based on the ideXlab platform.
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the inner logic of the Coase Theorem and a coasian planning research agenda
Environment and Planning B-planning & Design, 2008Co-Authors: Connie W Y HungAbstract:This paper is an original attempt to explore the inner logic of and apply the Coase Theorem—specifically the corollary of the invariant version of the Coase Theorem (CIT) and the extension of the corollary of the optimality version of the Coase Theorem (COTE)—to empirical planning research. This attempt hinges critically upon seven theoretical propositions developed on the basis of seven law and policy relevant determining variables that are manifestations of ways of ‘assignment of rights and liabilities’ for the application of CIT (COTE). This is preceded by an examination of the meaning of seven allocative outcomes or determined variables pertaining to the Theorem component ‘resource allocation would (under CIT not) be identical’. A 7×7 matrix (with forty-nine cells, each defining a specific research arena) is constructed, and relevant literature is surveyed to map the landscape of Coasian planning research as a step to building a transaction-cost-based research agenda. An example of empirically refutable planning hypotheses is given to demonstrate the usefulness of the propositions and to obtain a glimpse of the applicability of the agenda.
Ping Yung - One of the best experts on this subject based on the ideXlab platform.
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the Coase Theorem and a coasian construction economics and management research agenda
Construction Management and Economics, 2008Co-Authors: Felicity Wai Ngar Ng, Ping YungAbstract:This paper seeks to construct an empirical research agenda based on transaction cost reasoning informed by the Coase Theorem. It explains why the Coase Theorem has not been well received in the area of construction economics and management, as revealed by the relevant bibliometrics; develops a transaction cost-based research agenda for this arena based on the corollaries of the invariant version and optimality version of the Coase Theorem; and maps the current research endeavours that fall into that agenda. It has been explained that the Coase Theorem was based on Coase's 1960 article, 'The problem of social cost', and is not only compatible with, but also more general than, Coase's theory of the firm offered in his 1937 paper, 'The nature of the firm'. Hence, the 'two Coases' characterization, which suggests a dichotomy pro-organization/regulation stance versus a pro-free market stance, is fallacious.