International Review of Economics

, Volume 59, Issue 2, pp 145-155

First online:

The nature of Coasean property

  • Brian Angelo LeeAffiliated withBrooklyn Law School
  • , Henry E. SmithAffiliated withHarvard Law School Email author 

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The Coase Theorem is widely regarded as pointing to the importance of positive transaction costs for the analysis of economic institutions. Various interpretations of the Coase Theorem regard transaction costs as some set of impediments to contracting, or more broadly, as the costs of providing institutional solutions to conflicts over resource use. The abstract nature of the Coasean hypothetical tends to promote an abstract notion of property as a thin entitlement: a right in a designated person to take certain actions or derive value from a set of resource attributes. On this view, property is like a collection of tiny contracts. The property rights furnished by actual property law are much more coarse grained than this, and property is correspondingly “incomplete” for transaction costs reasons. Property and contract are substitutes in some situations, but they often are not interchangeable—because of Coasean transaction costs.


Coase Coase Theorem Transaction costs Property Contract

JEL Classification

B31 D23 K11 K12