Advertisement

Springer Nature is making SARS-CoV-2 and COVID-19 research free. View research | View latest news | Sign up for updates

Ronald Coase, “The Problem of Social Cost” and The Coase Theorem: An anniversary celebration

This is a preview of subscription content, log in to check access.

Notes

  1. 1.

    Blum and Kalvern's critique is posterior to the establishment of the Coase Theorem by Stigler. But it was not the first critique raised against Coase. Calabresi was the first one to level a specific criticism at the Coase negotiation result—namely that the result does not hold in the long run (Calabresi 1965, n. 28, p. 730). Calabresi later (1968) acknowledged his mistake but what is important is that the literature up to that point had not leveled an incorrectness claim (on Calabresi and the Coase theorem, see Marciano 2010). I thank Steve Medema for having stressed this point to me.

  2. 2.

    This was one of the most interesting part of the discussion in the 1968 conference on liability that Stigler attended, as a member of the organizing committee. He did not present a paper and did not much participate in the debates. The few words he said are particularly important and significant. For him, the existence of transaction costs did not prove anything about the Coase theorem: “everybody says that once we put transaction costs in, we are playing in a different ballpark. But that is not so… When people say that the theory no longer holds once we have departed from the zero transaction case, they are making what I think is an unfounded conjecture” (Stigler in Manne 1970, p. 124). It only evidenced a lack of methodological concern or a prejudice against theory: "I should like to start by complaining against the anti-theoretical attitude of all of the speakers" (Stigler in Manne 1970, p. 124).

References

  1. Bertrand, E. (2006). The coasean analysis of lighthouse financing: Myths and realities. Cambridge Journal of Economics, 30(3), 389–402.

  2. Bertrand, E. (2009). Empirical investigations and their normative interpretations: A reply to Barnett and Block. Public Choice, 140(1–2), 15–20.

  3. Bertrand, E. (2010). The three roles of the “Coase theorem” in Coase’s works. European Journal of History of Economic Thought, 17(4), 975–1000.

  4. Blum, W. J., & Kalven, H., Jr. (1967). The empty cabinet of Dr. Calabresi auto accidents and general deterrence. University of Chicago Law Review, 34(2), 239–273.

  5. Buchanan, J. M. (1959). Positive economics, welfare economics, and political economy. Journal of Law and Economics, 2(October), 124–138.

  6. Calabresi, Guido. (1965). The decision for accidents: An approach to nonfault allocation of costs. Harvard Law Review, 78(4), 713–745.

  7. Calabresi, Guido. (1968). Transaction costs, resource allocation and liability rules—A comment. Journal of Law and Economics, 11(1), 67–73.

  8. Cheung, S. N. S. (1973). The fable of the bees: An economic investigation. Journal of Law and Economics, 16(1), 11–33.

  9. Coase, R. H. (1960). The problem of social cost. Journal of Law and Economics, 3, 1–44.

  10. Coase, R. H. (1993). Law and Economics at Chicago. Journal of Law and Economics, 36((1) Part 2), 239–254.

  11. Coase, Ronald. H. (1994). Essays on economics and economists. Chicago: University of Chicago Press.

  12. Ellickson, R. C. (1986). Of Coase and Cattle: Dispute resolution among neighbors in Shasta county. Stanford Law Review, 38(3), 623–687.

  13. Ellickson, R. C. (1991). Order without law: How neighbors settle disputes. Cambridge: Harvard University Press.

  14. Gilmore, G. (1970). Products liability: A commentary. University of Chicago Law Review, 38(1), 103–116.

  15. Hovenkamp, H. (1990). The first great law and economics movement. Stanford Law Review, 42(4), 993–1058.

  16. Klaes, M. (2000). The history of the concept of transaction costs: Neglected aspects. Journal of the History of Economic Thought, 22(2), 191–216.

  17. Manne, H. G. (1970). Edited transcript of AALS-AEA conference on products liability. University of Chicago Law Review, 38(1), 117–141.

  18. Manne, H. G. (1993). An intellectual history of the George Mason University School of Law. http://www.law.gmu.edu/about/history.

  19. Marciano, A. (2010). Calabresi’s contribution to an “economic analysis of law”, mimeo.

  20. McCloskey, D. N. (1998). The so-called Coase theorem. Eastern Economic Journal, 24(3), 367–371.

  21. McKean, R. (1970). Products liability: Trends and implications. University of Chicago Law Review, 38(1), 3–63.

  22. Medema S. G. 1994. Ronald H. Coase, New York: St. Martin’s Press.

  23. Medema, S. G. (Ed.). (1995). The legacy of Ronald Coase in economic analysis. Brooldield: Edward Elgar.

  24. Medema, S. G., & Samuels, W. J. (1997). Ronald Coase and Coasean economics: Some questions, conjectures and implications. In W. Samuels, S. Medema, & A. Schmid (Eds.), The economy as a process of valuation (pp. 72–128). Cheltenham, UK: Edward Elgar.

  25. Miller, L. H., Jr. (1962). On the “Chicago School of Economics”. Journal of Political Economy, 70(1), 64–69.

  26. Posner, R. A. (1975). The economic approach to law. Texas Law Review, 53, 757–782.

  27. Posner, R. A. (1993). Gary Becker’s contribution to law and economics. Journal of Legal Studies, 22(June), 211–215.

  28. Stigler, G. J. (1972). The law and economics of public policy: A plea to the scholars. Journal of Legal Studies, 1(January), 1–12.

  29. Stigler, G. J. (1989). Two notes on the Coase theorem. Yale Law Journal, 99(3), 631–633.

  30. Wellisz, S. (1964). On external diseconomies and the government-assisted invisible hand. Economica, 31(124), 345–362.

  31. Wiseman, J. (1963). Guidelines for public enterprise: A British experiment. Southern Economic Journal, 30(1), 39–48.

  32. Wiseman, J. (1965). Cost-benefit analysis in education. Southern Economic Journal, 32(1), Part 2: Supplement: Education and the Southern economy, 1–12.

Download references

Author information

Correspondence to Alain Marciano.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Marciano, A. Ronald Coase, “The Problem of Social Cost” and The Coase Theorem: An anniversary celebration. Eur J Law Econ 31, 1–9 (2011). https://doi.org/10.1007/s10657-010-9200-0

Download citation

Keywords

  • Transaction Cost
  • Social Cost
  • Market Failure
  • Unrealistic Assumption
  • Coase Theorem